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 $3\mathrm{.}5$x 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.

Year $123456789101112$

Units sold $($thousands$)$

$56791113151514131110$

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$)$