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Please answer in excel formula. In spring of 2015, Jemison Electric was considering an investment in a new distribution center. Jemisons CFO anticipates additional EBIT

Please answer in excel formula.

In spring of 2015, Jemison Electric was considering an investment in a new distribution center. Jemisons CFO anticipates additional EBIT of $100000 for the first year of operation and over next five years, the firm estimates that this amount will grow at a rate of 5% per year. The distribution center will require an initial investment of $400000 that will be depreciated over a 5 year period towards Zero salvage value using straight line depreciation of $80000 per year. Jemisons CFO estimates that distribution center will need operating net working capital equal to 20% of EBIT to support operation. Assuming Tax rate to be 30%. And if the annual project free cash flow for each of next five years is given in the table below then,

0

1

2

3

4

5

EBIT

100000

105000

110250

115763

121551

Taxes

(30000)

(31500)

(33075)

(34729)

(36465)7

NOPAT

70000

73500

77175

81034

85085

Plus: Depreciation

80000

80000

80000

80000

80000

Less: CAPEX

(400000)

Less: Net working capital needs

(20000)

(1000)

(1050)

(1103)

(1158)

24310

Plus: Salvage Value of Fixed Assets in 5 years

Free Cash Flow (FCF)

(420000)

149000

152450

156073

159876

189396

Net Fixed Assets (Beginning of Year)

400000

320000

240000

160000

80000

Less : CAPEX

400000

Less: Depreciation

(80000)

(80000)

(80000)

(80000)

(80000)

Net Fixed Assets (End of Year)

400000

320000

240000

160000

80000

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  1. If Discount rate is 18%, what is NPV and IRR? (In Excel formulas)
  2. Conduct Breakeven Sensitivity Analysis (In excel formulas)

variable

Expected Value

Critical Value

% of Change

Sales Growth

EBIT (1)

Tax Rate

NWC/sales

Discount Rate

CAPEX for year 0

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