Recovery Year 1 2 Excel Problem! Show All Excel Work (32 points) DRS is a lid manufacturer that is considering a new project. This project will produce 2,000,000 units a year that will sell for $2.50 a lid. The variable cost is estimated to be $1.55 a lid. The necessary machinery will cost $2,000,000 and last 5 years. The estimated salvage value is $2.000 The equipment is depreciated using the MACRS seven-year tax depreciation factors. The plant manager estimates that the operation would require additional working capital of $50,000. The fixed costs are $1,200,000 per year. The company pays tax at a rate of 40 percent and the opportunity cost of capital is 12 percent What is the payback, NPV, and IRR! The Payback requirement is 4 years. Is the project acceptable based on the Payback modell is the project o acceptable based on the NPV modell is the project acceptable based on the IRR modell Should 3-Year 0.3333 0.4445 0.1481 0.0741 3 4 5 6 7 8 5-Year 0.2 0.32 0.192 0.1 152 0.1152 0.0576 7-Year 0.1429 0.2449 0.1749 0.1249 0.0893 0.0893 0.0892 0.0446 5 year 12 13 Inputs 14 Project Life 15 Eur 16 SV (Econ) 17 Increase NWC 11 Quantity 19 Price 20 VC 21 FC 22 Tax Rate 23 WACC 24 52.000.000 $2.000 $50,000 2.000.000 units per year $2.50 per une 51.35 per un $1.200.000 04 0.12