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Please Show your Calculations please, Thanks . 1. Al Dar wants to invest in a new portable solar electricity product with a life of 8

Please Show your Calculations please, Thanks

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. 1. Al Dar wants to invest in a new portable solar electricity product with a life of 8 years. Mr. Assif the project manager is tasked to perform an economic feasibility study about the project and submit a report. Mr. Assif collected the following data about the project to conduct the feasibility analysis: State Government in order to promote solar energy provides a tax-free subsidy for $2.5 million on initial capital investment. The equipment cost at the beginning of the project will be $17.5 million. The project also requires some additional equipment at the end of the third year for $1.25 million. The total life of the original equipment is 8 years with zero resale/ salvage value. Life of additional equipment is 5 years and a salvage value of $125,000. The working capital requirement at the initiation of the project is $2 million. The working capital will get fully realized in the ending year. Full financing for the project is done by issuing equity. The estimated sales volume over the 8 year period is :- Year 1 2 3 4-5 6-8 Units 72,000 108,000 260,000 270,000 180,000 . . . Expected Sales price = $120 per unit. Variable expenses will amount to 60% of sales revenue. The fixed operating cost will amount to $1.8 million per year. The loss of any year will be set-off from the profits of the subsequent two years. AIDAR is subjected to a tax rate of 30%. AlDar follows the straight-line method of depreciation. Mr. Assif calculates the net present value (NPV) of the project by discounting the cash- flows at 12%. If NPV is positive then the project is feasible and the company can consider the project to be taken. Answer the following questions: A. The Initial Cash outflow? B. Find out the depreciation value by using the following equation: Depreciation = Asset Cost - Salvage Value / Useful Life of Asset C. Find out the Statement of Profit Before Tax (PBT) (2 marks) Year PBT Sales Sales Volume price Net sales Depreciation Variable Fixed cost cost 1 2 3 4 5 6 7 8 D. Find out the Statement of Net Cash Inflow: Hint: when company incur lossit pay zero tax for that year Year PBT Tax @30% PAT Paid after Tax) Depreciation Cash inflows E. Find the Statement for Calculation of Discounted Cash Flows Year Cash inflows PV factor @12% Discounted Cash flows 1 2 3 4 5 6 7 8 8 8 Total Discounted Cashflows F. What is the NPV? NPV = Trade Discount Cash Inflows Initial Cash Outflows

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