Please help with HW. All HW submissions must be done using Microsoft Excel.

Initial investment. The initial investment of USD 1,000,000 is used to purchase capital equipment. This equipment will be depreciated straight line to zero. At the end of six years, the remaining equipment will be sold for Colombian Peso (COP) 250,000,000.

Working capital. The investment in working capital is COP 250,000,000. There are no changes in working capital until the end of the project when the full amount is recovered.

Units, price, and costs. The firm will produce 1,500 units of a product annually. The selling price is expected to be COP 750000 in the first year. This price is expected to increase at a rate of 4 percent annually. The direct expense per unit is expected to be COP 250000 in the first year. This is expected to increase at a rate of 7 percent annually. Indirect expenses are expected to be COP 75,000,000 annually. Taxes and miscellaneous. Colombian taxes on income and capital gains are 33 percent. There are no additional withholding taxes. All cash flows are repatriated when generated, and there are no additional U. S. taxes. The parity conditions are assumed to hold between Colombia and the United States. The relevant inflation indexes indicate a rate of 2 percent for the United States and 6 percent for Colombia. Spot USDCOP equals 3100. Brady's USD denominated WACC is 12.5 percent.

a. Calculate COP cash flows.