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Need to solve in excel with formulas Thank you in advance! 2-9 INTRODUCTORY PROJECT VALUATION The CT Computers Corporation is consider- ing whether to begin
Need to solve in excel with formulas
2-9 INTRODUCTORY PROJECT VALUATION The CT Computers Corporation is consider- ing whether to begin offering customers the option to have their old personal computers (PCs) recycled when they purchase new systems. The recycling system would require CT Computers to invest $600,000 in the grinders and magnets used in the recycling process. The company estimates that for each system it recycles, it would generate $1.50 in incre- mental revenues from the sale of scrap metal and plastics. The machinery has a five-year useful life and will be depreciated using straight-line depreciation toward a zero salvage value. CT Computers estimates that in the first year of the recycling investment, it could recycle 100,000 PCs and that this number will grow by 25% per year over the remaining four-year life of the recycling equipment. CT Computers uses a 15% discount rate to analyze capital expenditures and pays taxes equal to 30%. a. What are the project cash flows? You can assume that the recycled PCs cost CT Computers nothing. b. Calculate the NPV and IRR for the recycling investment opportunity. Is the invest- ment a good one based on these cash flow estimates? c. Is the investment still a good one if only 75,000 units are recycled in the first year? d. Redo your analysis for a scenario in which CT Computers incurs a cost of $0.20 per unit to dispose of the toxic elements from the recycled computers. What is your recommendation under these circumstances Thank you in advance!
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