Please refer to the spreadsheet file below for the analysis related to a hog feed project. United Feed is considering a proposal to produce hog feed. The hog feed project requires an investment in new plant and equipment of $2.20 million. This could be depreciated for tax purposes straight-line over 10 years to zero salvage value. However, the plant and equipment will be sold when the project is terminated for $1.5 million. The project will generate sales for 3 years and will be terminated at the end of year 4. Year 1 sales of hog feed are expected to be 10,000 tons at $520 per ton, and thereafter quantity is forecasted to grow by 1% a year while the price remains constant. Costs are expected to be $416 per ton. Profits are subject to tax at 23% and the cost of capital is 20%. The project requires the following amounts in working capital, $450,000, $520,000, $540,800, $562,432 in year 0 year 3, respectively and the accumulated level of working capital in year 3 will be recovered in year 4.

a. Enter or determine the values of yellow background cells only in the spreadsheet file, please do not modify other cells. Should United Feed invest in this project? Explain.

b. What are possible concerns or questions for further analysis? Explain.

Cost of capital Total cash flow of investment Total cash flow of project NPV \begin{tabular}{|l|} \hline \\ \hline Plant and equipment \\ \hline Accumulated depreciation \\ \hline Book value \\ \hline \end{tabular} \begin{tabular}{|l|r|} \hline Sale of plant and equipment & \\ \hline Book value & 2,200,000 \\ \hline Gain or loss from sale & 2,200,000 \\ \hline Tax on sale & 0 \\ \hline Aftertax salvage value & 0 \\ \hline \end{tabular} Cost of capital Total cash flow of investment Total cash flow of project NPV \begin{tabular}{|l|} \hline \\ \hline Plant and equipment \\ \hline Accumulated depreciation \\ \hline Book value \\ \hline \end{tabular} \begin{tabular}{|l|r|} \hline Sale of plant and equipment & \\ \hline Book value & 2,200,000 \\ \hline Gain or loss from sale & 2,200,000 \\ \hline Tax on sale & 0 \\ \hline Aftertax salvage value & 0 \\ \hline \end{tabular}