Penn Printing is considering opening a new production facility near Erie, PA. In deciding whether to proceed with the project, the company has gathered the following information:

• The estimated up-front cost of constructing the facility at t = 0 is $10 million. For tax and accounting purposes, these costs will be depreciated using a MACRS five (5) year schedule.
• The company will operate the facility for 4 years. It estimates today that the facility can be sold at the end of the project's life for $2.2 million.
• If the facility is opened, Penn will have to increase its inventory by $3.0 million at t = 0. In addition, its accounts payable will increase by $1.6 million at t = 0.
• The new facility will increase the company's yearly sales by $7.8 million.
• The annual operating costs (excluding depreciation) of the new facility are expected to equal 58% of annual revenues.
• The company's tax rate is 25%.
• The project's cost of capital is 10.5%.

a. Set up a spreadsheet and calculation of projected cash flows

b. Calculate NPV (using excel function)

c. Calculate IRR (using excel function)

d. Calculate MIRR (using excel function)

e. Calculate payback period

f. Calculate discounted payback period

g. Answer to whether the company should accept the project and why.

h. Graph the NPV profile for the project