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Quixotic Enterprises is about to embark on another venture. Poncho Sanchos, the faithful financial analyst, once again will examine the viability of This venture after

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Quixotic Enterprises is about to embark on another venture. Poncho Sanchos, the faithful financial analyst, once again will examine the viability of This venture after 31 failures. Anumber of windmills are to be constructed on the southern frontier to generate electricity. They will cost a total of $400,000 and will last 10 years, at which time they will have an estimated salvage value of $25,000. However, a capital upgrade of $100,000 will be required at the end of five years. An inventory of parts {working capital) amounting to $10,000 will be required during the term of the venture and will be housed in a warehouse that is presently not being used, but which has been used for Quixotic's previous ventures. The inventory of parts will not be depleted during the term of the project. The warehouse could be rented out at $5,000 per year. This enterprise is expected to generate revenues of $175,000 a year for 10 years. The federal experts on wind will impose their new tax on the wind, and that will cost the venture $1500 a year. This new tax will be a deduction for income tax purposes and will be known as the BWT (Big 'Wind Tax). Tax rate 39% CCA rate 5% Cost of capital 20% Required: a. Calculate the NPV of this venture. b. Calculate the PI of this venture. c. Should Quixotic dream the impossible dream

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