Please put your answers on XL, and how you plugged it in on XL. thanks

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17 5 Webmasters.com has developed a powerful new server that would be used for corporations Internet 6 activities. It would cost $10 million at Year 0 to buy the equipment necessary to manufacture the server. 7 The project would require net working capital at the beginning of each year in an amount equal to 10% of 8 the year's projected sales, for example, NWC, = 10%(Sales). The servers would sell for $24,000 per unit, 9 and Webmasters believes that variable costs would amount to $17,500 per unit. After Year 1, the sales 10 price and variable costs will increase at the inflation rate of 3%. The company's nonvariable costs would 11 be $1 million at Year 1 and would increase with inflation. 12 13 The server project would have a life of 4 years. If the project is undertaken, it must be continued for the 14 entire 4 years. Also, the project's returns are expected to be highly correlated with returns on the firm's 15 other assets. The firm believes it could sell 1,000 units per year. 16 The equipment would be depreciated over a 5-year period, using MACRS rates. The estimated market value of the equipment at the end of the project's 4-year life is $500,000. Webmasters' federal-plus-state tax rate is 40%. Its cost of capital is 10% for average-risk projects, defined as projects with a coefficient of variation of NPV between 0.8 and 1.2. Low-risk projects are evaluated with a WACC of 8%, and high-risk 20 projects at 13%. 21 22 a. Develop a spreadsheet model, and use it to find the project's NPV, IRR, and payback. 23 Key Output NPV = 25 Part 1. Input Data (in thousands of dollars) IRR 26 MIRR 27 Equipment cost $10,000 28 Net WC/Sales Market value of equipment at Year 4 29 First year sales (in units) Tax rate 30 Sales price per unit $24.00 WACC 10% 31 Variable cost per unit $17.50 18 19 24 10% 1.000 $500 40% Inflation 32 Nonvariable costs 3.0% $1,000 Build a Model 17 5 Webmasters.com has developed a powerful new server that would be used for corporations Internet 6 activities. It would cost $10 million at Year 0 to buy the equipment necessary to manufacture the server. 7 The project would require net working capital at the beginning of each year in an amount equal to 10% of 8 the year's projected sales, for example, NWC, = 10%(Sales). The servers would sell for $24,000 per unit, 9 and Webmasters believes that variable costs would amount to $17,500 per unit. After Year 1, the sales 10 price and variable costs will increase at the inflation rate of 3%. The company's nonvariable costs would 11 be $1 million at Year 1 and would increase with inflation. 12 13 The server project would have a life of 4 years. If the project is undertaken, it must be continued for the 14 entire 4 years. Also, the project's returns are expected to be highly correlated with returns on the firm's 15 other assets. The firm believes it could sell 1,000 units per year. 16 The equipment would be depreciated over a 5-year period, using MACRS rates. The estimated market value of the equipment at the end of the project's 4-year life is $500,000. Webmasters' federal-plus-state tax rate is 40%. Its cost of capital is 10% for average-risk projects, defined as projects with a coefficient of variation of NPV between 0.8 and 1.2. Low-risk projects are evaluated with a WACC of 8%, and high-risk 20 projects at 13%. 21 22 a. Develop a spreadsheet model, and use it to find the project's NPV, IRR, and payback. 23 Key Output NPV = 25 Part 1. Input Data (in thousands of dollars) IRR 26 MIRR 27 Equipment cost $10,000 28 Net WC/Sales Market value of equipment at Year 4 29 First year sales (in units) Tax rate 30 Sales price per unit $24.00 WACC 10% 31 Variable cost per unit $17.50 18 19 24 10% 1.000 $500 40% Inflation 32 Nonvariable costs 3.0% $1,000 Build a Model