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please show formula for npv,irr,payback,and mirr Situation Kent State Innovation Labs (KSIL) is considering adding a new line to its product mix, and the capital
please show formula for npv,irr,payback,and mirr
Situation Kent State Innovation Labs (KSIL) is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by you. The production line would be set up in unused space in a warehouse in downtown Kent, OH. The invoice price of the machinery would be approximately $200,000, would require another $10,000 in shipping charges, and would cost an additional $30,000 for equipment installation. The machinery has an economic le of 4 years, and KSIL has secured a special tax ruling that places the equipment in the MACRS 3-year elass, Management expects the machinery to have a salvage value of $25,000 after 4 years of use. This new product line would generate an incremental amount of sales of 1,250 units per year for 4 years at an incremental cost in the first year of 100 per unit, excluding depreciation. Each unit can be sold in the first year for $200. The sales price and cost are both expected to increase by an inflation rate of 3% per year. The firm's net working capital, to handle the new line, would have to increase by an amount equal to 12% of sales revenues. The firm's overall weighted average cost of capital ka 10%, and the firm's tax rate is 40%. A. Enter the input data for this project Analysis of New Expansion Project Part 1: Input Data Results summary NPV IRR Payback MIRR - Equipment cost Shipping charge Installation charge Economic Life Salvage Value Tax Rate Cost of Capital Units Sold Sales Price Per Unit Incremental Cost Per Unit Inflation rate NWC/Sales The firm spent $150,000 Last year researching the feasability of taking on this project. Should this cost be considered in the analysis? Why or why not Step by Step Solution
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