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.

A number of windmills are to be constructed on the southern frontier to generate electricity. They will cost $$401,000$ and will last $11$ years, at which time they will have an estimated salvage value of $$30,000.$ However, a capital upgrade of $$94,000$ will be required at the end of five years. An inventory of spare parts $($working capital$)$ amounting to $$9,000$ will be required during the term of the venture and will be housed in a warehouse that is currently not being used, but which has been used for Quixotic$$s previous ventures. The warehouse could be rented out at $$5,000$ per year.

This enterprise is expected to generate cash from the sale of electricity of $$151,000$ a year for $11$ years. Cash expenses for each of the $11$ years will be $$9,000.$

The company$$s tax rate is $28$ percent, the CCA rate is $5$ percent and the cost of capital is $21$ percent.

Requirements:

A$.$ Calculate the Net Present Value of the Windmill venture by completing the table below: $($You need a number for every cell in this spreadsheet.$)<>$ Event $|$ Expected Cash Flow $|$ After$-$tax Cash Flow $|$ Present Value

Inital Investment $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Working Capital $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Revenues $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Expenses $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Opportunity Cost $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Capital Upgrade $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Salvage $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Working Capital Revcovery $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

CCA Tax Shield $|$ N$/$A $|$ N$/$A $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Net present value $|$ N$/$A $|$ N$/$A $|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

CALCULATE ABOVE $**$Fill in the blank & Answer the above in given table$**$ B$.$ It's not worth any marks, but it helps with the marking: what number did you use for $($Cpv $-$ Spv$)?$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$($Enter your answer as a positive number.$)$

C$.$ Should Quixotic dream the impossible dream and invest in the Windmill venture?

YES or NO$?\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$****$CALCULATE AND TELL THE ANSWERS FOR ABOVE $****$