Scenario Analysis. Let$$s reconsider Whole Foods$$ decision about whether

to build a new grocery store in Newton. Scenario $1$ assumes the store will be

paid for in year $0,$ have a useful life of $12$ years, be depreciated over $12$ years,

and have a market value of $$0$ at the end of year $12.$ Scenario $2$ assumes lower

sales and higher costs as shown below, but that the store will have a useful life

of $($and be straight$-$line depreciated over$)15$ years, and that the market value

of store will be $$0$ at the end of $15$ years.

Scenario $1$ Scenario $2$

Capital Expenditure $$5,400$ $$6,000$

Annual Sales $$16,000$ $$15,600$

Annual Variable Costs $$13,000$ $$13,000$

Annual Fixed Costs $$2,000$ $$2,200$

Annual Depreciation $$450$

What is the annual depreciation charge in scenario $2?$ What is the annual cash

flow from operations under each scenario? What is the NPV of the grocery

store under each scenario? $($Assume the tax rate is $40\%$ and Whole Foods$$

annual discount rate is $8\%.$