MONARCH CORPORATION IS GOING TO START A NEW PRODUCT LINE OF PRODUCTS IN A WHOLE NEW MARKET. THE DATA FOR ANALYSIS IS PRESENTED BELOW: COST OF THE EQUIPMENT NEEDED $194,000 FIVE YEAR PROPERTY FOR TAX DEPRECIATION NEW WORKING CAPITAL NEEDS $50,000 WILL BE RECOVERED AT THE END OF THE THIRD YEAR PROJECTED NEW REVENUES: SALES PROBABILITY $200,000 30% $250,000 50% $300,000 20% COST OF GOOD SOLD 30% OF SALES VARIABLE CASH COSTS 10% OF SALES ANNUAL FIXED CASH COSTS: RENT $50,000 CLEANING $20,000 MAINTENANCE & OTHER $10,000 TOTAL FIXED COSTS $80,000 EQUIPMENT DISPOSAL PROCEEDS $19,400 SALVAGE VALUE AT THE END OF YEAR 6 FIRM'S COST OF CAPITAL 12.00% TAX RATE 35% NOTE - WHEN COMPUTING TAX, A NET LOSS FOR THE YEAR MEANS A POSITIVE TAX SAVINGS IS CREATED SINCE THERE IS OTHER INCOME TAX ON OTHER INCOME TO OFFSET. DEPRECIATION RATES FOR TAX PURPOSES: YEAR ONE 20.00% YEAR TWO 32.00% YEAR THREE 19.20% YEAR FOUR 11.50% YEAR FIVE 11.50% YEAR SIX 5.80% ASSUMPTIONS: ALL CASH FLOWS IN YEARS 1-6 OCCUR AT THE END OF THE YEAR. ALL INITIAL CASH INFLOWS OR OUTFLOWS OCCUR TODAY. REQUIRED: A. ASSUMING SALES ARE $200,000 COMPUTE THE PAYBACK, IRR AND NPV. FOR THE NPV, COMPUTE AT BOTH THE FIRM'S DISCOUNT RATE AND 16%, WHICH IS A 4% PREMIUM ADDED TO THE RATE. B. COPY THE WHOLE WORKSHEET AND SOLUTIONS FOR PART A TO THE WORKSHEET NAMED PART B, AND REDO THE COMPUTATIONS BY CHANGING THE ANNUAL SALES TO $250,000. C. COPY THE WHOLE WORKSHEET AND SOLUTIONS FOR PART A TO THE WORKSHEET NAMED PART C, AND REDO THE COMPUTATIONS BY CHANGING THE ANNUAL SALES TO $300,000. You should place your answers in each of the boxes shown below color-coded in Yellow color. PART A YEARS 0 1 2 3 4 5 6 INITIAL INVESTMENT (NO INCOME TAX AFFECTS) COST OF THE EQUIPMENT NEEDED $ WORKING CAPITAL NEEDS TOTAL INITIAL INVESTMENT ANNUAL OPERATING RECEIPTS: (using the information given above, fill in the blanks below to determine each year's operating cash flow): SALES $ $ $ $ $ $ LESS COST OF GOODS SOLD GROSS PROFIT LESS VARIABLE COSTS LESS FIXED COSTS LESS DEPRECIATION EXPENSE PROFIT (LOSS) BEFORE TAX LESS INCOME TAX EXPENSE (BENEFIT) PROFIT (LOSS) AFTER TAX PLUS DEPRECIATION EXPENSE TOTAL OPERATING CASH INFLOWS $ $ $ $ $ $ SALVAGE VALUE ON EQUIPMENT: (figure out the salvage value of the equipment for tax purposes): PROCEEDS $ LESS TAX BASIS OF EQUIPMENT: COST ACCUMULATED DEPRECIATION TAX BASIS GAIN ON SALVAGE LESS INCOME TAX ON SALVAGE GAIN NET PROCEEDS ON SALVAGE AFTER TAXES $ RELEASE OF ORIGINAL WORKING CAPITAL NEEDS (NO TAX AFFECT) $ TOTAL CASH INFLOWS (OUTFLOWS) CUMULATIVE CASH INFLOWS (OUTFLOWS) THREE METHODS OF EVALUATION: PAYBACK PERIOD YEARS (round to 2 decimal places). INTERNAL RATE OF RETURN Answer is in %-2 decimal places please. NET PRESENT VALUE AT 12.00% Answer is in $-round answer to nearest dollar. NET PRESENT VALUE AT 16.00% Answer is in $-round answer to nearest dollar. Note: Pages 375-380 in your course textbook show you how to calculate the Payback Period, the Internal Rate of Return, and the NPV