Project $1$ Calculations must be done in Excel $-$ You must create your own spreadsheet $($do not

copy and paste someone else's$).$ This question should be done using Method $1$ as outlined in

lecture $6($i$.$e$.$ Tax Effects, then Cash Flows then NPV$).$

Happy corporation projects their future unit sales for a new headphone. The projected unit sales are as

below.

To produce the headphones, the initial net working capital of $$2,000,000$ is required and additional net

working capital is also required each year, which is $20\%$ of the projected sales increase for the following

year. The net working capital will be recovered at the end of a project. In addition, the initial installation

cost of the machine for production is $$21,000,000.$ The machine will be depreciated for tax purposes using

straight$-$line depreciation with the useful life of $8$ years. Also, costs and unit price are as below.

In five years, the machine can be sold for about $30\%$ of its acquisition cost. The tax rate is $30\%$ and the

required rate of return is $15\%.$

Tasks

$($a$)$ What is the NPV of the project? Explain and defend your processes, answer, and calculations clearly.

$($b$)$ Assuming that the project can be repeated indefinitely, what is the NPV $$ of the project? Suppose that

there is another project with the NPV of $$4$ million and the NPV $$ of $$6$ million. Which project would

you choose, assuming that two projects are mutually exclusive and can be repeated indefinitely?

Why? Explain and defend your processes, answer, and calculations clearly. PLASE PROVIDE THE EXCEL SOLUTION