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Estimate the NPV of terminating the project now using the termination analysis

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Find the NPV of this expansion. Recommend whether to accept with brief quantitative and qualitative explanation

1 Class number last year 2015 2016 2017 2018 1001 801 99 97 802 641 102 69 642 514 105 50 514 412 108 50 Operating Earnings Imputed interest 4 25 -11 25 -26 25 -55 25 Earnings before tax Income tax (0.35) -21 -7 -36 -13 -51 -18 -80 -28 Earnings after tax -14 -23 -33 -52 Sales Production costs General administrative costs Depreciation 1200 Forecast for the Phay Ding Project original capital investment current working capital investment net fixed assets 556 254 339 0.800 v 0.210 w Year 0 2015 1 2016 2 2017 3 2018 4 2019 5 2020 6 2021 7 sales production cash costs1 Incremental GA EBITDA EBITDA(1-T) Depreciation(t) Dwc CAPX[replacement] CAPX[expansion] SVNOT DOperating CF PV factor @ 11.0% Present values Net present value t 0.35 w 0.210 cash salvage estimate 0 0 1 The accountant, using a corporate policy, includes 5% of sales as part of production costs, allocating the CEO's salary. 2 cash salvage = 0.75 of the book value of net fixed assets at each period Termination Analysis of the Phay Ding Project Notes: [1] Even though there are 10 columns, the analysis is not 10 years. Delete excess columns. [2] Some rows possibly have all zeroes 2022 8 2023 9 Your class number year 1 0 Sales in units 1 2 3 1000 1000 ?? 4 ?? 5 ?? ?? Inflation rate: PPI Selling price per unit 0.025 0.025 0.025 0.025 0.025 0.025 $ 5.010 increasing you hack it up & enter the new amount Value added per unit Raw material per unit Raw material cost inflator income tax rate cash salvage estimate Research & Development $ 3.510 increasing you hack it up & enter the new amount $ 0.450 increasing you hack it up & enter the new amount 0.100 0.150 0.200 0.250 0.300 0.350 0.410 0 543 year 6 7 ?? 8 ?? 9 ?? 10 ?? 0.025 0.025 0.025 0.025 0.025 0.400 0.450 0.450 0.450 0.450 6 7 8 9 10 SCARTNOC Inc. Succor [?] Project 0 New sales Value added cost Raw material cost New fixed costs 1 2 3 4 5 -99 Absolute value increasing EBITDA EBITDA(1-t) CAPX[expansion] non-cash charge tax shield new inventory SVNOT new operating cash flows present value factors @ -1981 0.0810 Present values NPV