**Only Answer part F: not a two page report, but a brief summary of why they should accept/reject proposal

Use Abandoment Option for data.

A manufacturer is planning to produce and sell a new product. lt would cost S20 million at Year 0 to buy the equipment necessary to manufacture the product. The project would require net working capital at the beginning of each year in an amount equal to 15% of the years projected sales: for example, NWC. 15%(Salesi). The product would sell for S30 per unit, and believes that variable costs would amount to S15 per unit. After Year 1, the sales price and variable costs will increase at the inflation rate of3%. The project's fixed costs would be S5/unit at Year l and would increase with inflation. The products will be sold for 4 years. If the project is undertaken, it must be continued for the entire 4 years. The firm believes it could sell 500,000 units per year. The equipment would be depreciated over using straight-line depreciation. The estimated market value of the equipment at the end of the project's 4-year life is S500,000. The federal-plus- state tax rate is 40%. Its cost ofcapital is 10%