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Please do it ASAP Thanks A company has to decide whether to select a project or not. The following information are provided: The cost of

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A company has to decide whether to select a project or not. The following information are provided: The cost of the capital expenditure involved is $55,500 Discount rate of the project is 12%, Company will have to spend $8,500 on net working capital that will be returned to him at the end of the project He will depreciate his capital expenditure using straight line method over the project life. The duration of the project is 6 years. Tax rate of the project is 18% . His accountant has forecast a revenue of $ 21,000 annually. The company is expecting $7600 of rent revenue . Further information is provided: Supplies expense $800 Supplies $1300 Salary expenses $1400 Unearned Revenue $6100 Utilities $ 1050 Rental expenses $950 Prepaid Rent $1500 At the end of the project he will sell the equipment Purchased initially At the end of the project he will sell the equipment purchased initially [CAPEX] at 5000 The salvage value of CAPEX is $7500 REQUIRED a) Calculate the initial investment b) Calculate each year cash flow c) Calculate the terminal value of the asset used d) Calculate the NPV for this project. e) If a company is faced with two projects Project A has a NPV of $2000 Project B has a NPV of -$1500 Which project is the company going to choose? Why? f) Calculate the Profitability Index [PI). What is the purpose of calculating Pl of projects? g) Calculate IRR of the project. h) What does IRR mean and how do we use this to choose a project ? Question 2

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