PLEASE SHOW THE STEP BY STEP CALCULATION

Develop a proposal for this case, if University Canada West wants to invest in a New Post Graduate Program. The Project under consideration costs $20 Million, has a 8 (eight) years life, and has no salvage value. Depreciation is straight-line to zero. The required rate of return is 19%. Sales are projected at 5,000 students per year. Tuition Fees per student will be $7,500. Variable cost per student will be $3,500, and fixed costs are $4.5 Million per year. Tax rate is 30%. Ignore CCA.

Your proposal should contemplate the following questions and problems:

Suppose you think that the number of students is accurate to within 15%. Calculate the upper and lower bounds for these projections. (BEST-case and WORST-case scenarios).

Calculate the Base-case NPV and IRR (5,000 students/year).

Should UCW accept the project based on the base-case scenario?

Calculate the BEST-case NPV and the WORST-case NPV and IRR

If you look at best and worst-case scenarios, what else should be considered? Will you change your recommendation and why?

Calculate other project evaluation criteria that you learned from the textbook and lessons:

Payback period

discounted payback period

Break even point

profitability index,

average accounting return

and explain what it means in terms of this project, how it will influence your decision.

Maximum grade: 15% of the total. See the rubric below.