Part D $-$ Investment Assessment

Complete an investment assessment of this venture using the following information:

Initial investment $($capital cost$)$ $$$350,000.$

Projected venture lifetime $-12$ years.

Manufacturing costs $-$ $$20,000$ pa fixed costs $($excluding salaries, discussed below$),$ variable

costs $($incremental cost per unit produced$)$ are $$7$ per unit produced in years $1-3,$$$8$ per unit

produced in years $4-10,$ and $$8\mathrm{.}5$ per unit produced in years $10-12.$ Your salaries are $$75,000$

p$.$a$.$ for production of up to $8,000$ units, then additional $$5,000$ p$.$a$.$ for every extra $1,000$

units produced. Salaries are added to the fixed costs.

Sales price $-3\mathrm{.}5x$ incremental cost per unit produced.

Depreciation $-12$ years, straight$-$line.

Your product life cycle pattern is shown in Table $3$ below.

Table $2$: Expected sales volumes.

Create an Excel Spreadsheet to assess the value of this business investment. You must calculate and

graph Cumulative Cash Flow and estimate the Payback Period, then calculate the Net Present Values

at $10\%,12\%,15\%,18\%$ and $20\%$ discount rates; the Internal Rate of Return; the Return on Original

Investment; and the Return on Average Investment. Make an assessment about the attractiveness of

this venture and point out how your assessment changes according to reasonable variations in sales

price.

Please hand in your working Excel spreadsheet $($not a PDF$)$ via Learn as your upload for

this assignment. You may also submit a PDF$/$Word file with explanations, or simply add

comments to your Excel sheet.