Newco is looking at expanding its business to include Bitcoin Mining, and change their name to BitCo. They will need to purchase $2,000,000 worth of mining machines. It is estimated that these machines will generate $2,000 in revenue per day. The machines will require 15 days of maintenance per year, during which time they will not produce any revenue. Newco estimates that the machines will cost $200 per day of operation. BitCo also has to pay a commission of 1 penny per dollar of revenue. BitCo has a 5.0% cost of capital and a 25% tax rate. The machines can be sold for 25% of the original cost after 5 years. The machines will be depreciated using straight-line depreciaton over 5 years. Tax Rate 25.0% Cost of Capital 5.0% Annual Depreciation 400,000 Operating Days / Year 350 Years >> 0 1 2 3 4 5 Capex ? Revenue Mining Revenue ? ? ? ? ? Total Revenue ? ? ? ? ? Expenses Fixed ? ? ? ? ? Variable ? ? ? ? ? Depreciation ? ? ? ? ? Income ? ? ? ? ? Taxes ? ? ? ? ? Net Income ? ? ? ? ? Net Cash Flow ? ? ? ? ? ? Salvage Value ? Net Cash Flows ? ? ? ? ? ? Cumulative Net Cash Flow ? ? ? ? ? ? Discounted Cash Flow ? ? ? ? ? ? Cumulative DCF ? ? ? ? ? ? 7 What is the project's NPV? Response A. $250,079 B. $847,659 C. $321,654 8 What is the project's IRR? Response A. 7.5% B. 17.8% C. 10.0% 9 How much longer is the discounted payback period than the net payback period? Response A. 0.61 years B. 1.20 years C. 0.45 years 10 What is the project's Profitability Index? Response A. 1.42 B. 1.27 C. 1.32