Requirements: (Write answers to the following questions in the 'Ques1' sheet of the EXCEL TEMPLATE provided for Assignment-2.)

(a) Refer to the "Lecture Illustration - 4A-1" as discussed in the "Week-5 Recorded Topic Discussion Session", calculate the (i) NPV, (ii) IRR, (iii) PVI, (iv) Payback period, (v) Discounted payback period for ALTERNATIVE Investment Proposal-Q if the required rate of return is 10.50 and the annual net cash flows of Proposal Q are: Year-0 ($300m); Year-1 $82m; Year-2 $107m; Year-3 $149m and Year-4 $168m.

(b) Calculate the crossover rate (between proposals P and Q) based on changed cash flow data mentioned in the requirement-a above. Show the range of required rates for which either proposal-P or proposal-Q would be preferred.

(c) Based on your findings in requirements a and b above, what would be the decision of selection of proposal (when the required rate of return is 10.50 percent)?

(d) Refer to the "Lecture Illustration - 4B-2" as discussed in the "Week-6 Recorded Topic Discussion Session", calculate the tax implication in the third year relating to the sale of the equipment if the depreciation rate is 22% straight line and the purchase price (of the equipment) is $39,433.

(e) Refer to the "Lecture Illustration - 4B-4" as discussed in the "Week-6 Recorded Topic Discussion Session", prepare a new cash flow table (in the "CF-4B-4" sheet of the Excel Template provided, using the way explained in the Week-6 eLearning video), and calculate the NPV, IRR, PVI and discounted payback period after incorporating the following changes (other information will remain the same as provided in the illustration):

• The installation cost for the juice producing machine would be $5,000 and the transportation cost of $5,000 would be paid by the supplier. The machine will have an economic life of six years and would be depreciated at 11 percent straight line for the tax purpose.
• Sales are expected to grow at 26% in each year until the 6th year. Costs have been estimated to be 42 percent of sales revenue. In addition, there would be an annual fixed overhead cost of $8,922.
• Annual sales of the company's cookies will increase by $10,000 in the first year and that increased sales will further grow by 11 percent in each year until the 6th year.
• Applicable corporate tax rate would be 33 percent.
• The cost of capital is estimated to be either 10.44 percent or 14 percent. The management has targeted a discounted payback period of 2 years.

What would be your decision about this project at 10.44 and 14 percent costs of capital?

What would be your comment in recommending this project if you discover that this machine has options to produce a range of variety of juices that are not 100% natural. Your further investigation reveals that all data provided for this project is based on the production of juice using multiple concentrated ingredients not considered healthy choices.