PDF, Word, or Screenshot file will not be graded. This is your Excel homework. Once you finish your homework, upload your Excel file. 1. Howell Petroleum is considering a new project that complements its existing business. The machine required for the project costs $3.82 million. The marketing department predicts that sales related to the project will be $2.52 million per year for the next four years, after which the firm expects to sell it for $500,000. The machine is a five-year class asset and will be depreciated down to zero over five years under the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 25 percent of sales. Howell also needs to add net working capital of $200,000 immediately. The additional net working capital will be recovered in full at the end of the project's life. The corporate tax rate is 35 percent. The required rate of return (or discount rate) for the project is 12.5 percent. Compute the NPV, IRR, and payback period of the project. The firm's acceptable payback period is 3 years. Is this project acceptable to the firm? 2. You have been asked by the president of Ellis Construction Company, headquartered in Toledo, to evaluate the proposed acquisition of a new earthmover. The mover's basic price is $750,000, and it will cost another $100,000 to modify it for special use by Ellis Construction. The mover falls into the MACRS 5 -year class. It will be sold after 5 years for $200,000, and it will require an increase in working capital (spare parts inventory) of $50,000, which will be recovered in full at the end of the project's life. The earthmover purchase will have no effect on revenues, but it is expected to save Ellis $420,000 per year in before-tax operating costs. Ellis's marginal tax rate is 30%. The cost of capital (discount rate) is 11%. Use the following 5-year MACRS schedule: 20%,32%,19.2%,11.52%,11.52%, and 5.76%. Compute the NPV and IRR of the project. Would you ask the president to buy the equipment? PDF, Word, or Screenshot file will not be graded. This is your Excel homework. Once you finish your homework, upload your Excel file. 1. Howell Petroleum is considering a new project that complements its existing business. The machine required for the project costs $3.82 million. The marketing department predicts that sales related to the project will be $2.52 million per year for the next four years, after which the firm expects to sell it for $500,000. The machine is a five-year class asset and will be depreciated down to zero over five years under the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 25 percent of sales. Howell also needs to add net working capital of $200,000 immediately. The additional net working capital will be recovered in full at the end of the project's life. The corporate tax rate is 35 percent. The required rate of return (or discount rate) for the project is 12.5 percent. Compute the NPV, IRR, and payback period of the project. The firm's acceptable payback period is 3 years. Is this project acceptable to the firm? 2. You have been asked by the president of Ellis Construction Company, headquartered in Toledo, to evaluate the proposed acquisition of a new earthmover. The mover's basic price is $750,000, and it will cost another $100,000 to modify it for special use by Ellis Construction. The mover falls into the MACRS 5 -year class. It will be sold after 5 years for $200,000, and it will require an increase in working capital (spare parts inventory) of $50,000, which will be recovered in full at the end of the project's life. The earthmover purchase will have no effect on revenues, but it is expected to save Ellis $420,000 per year in before-tax operating costs. Ellis's marginal tax rate is 30%. The cost of capital (discount rate) is 11%. Use the following 5-year MACRS schedule: 20%,32%,19.2%,11.52%,11.52%, and 5.76%. Compute the NPV and IRR of the project. Would you ask the president to buy the equipment