Sweet Water Enterprise is considering expanding into a new line of business. It is expected that this new business will require the purchase of equipment that will cost $$400,000$ with an estimated market value of $20,000$ at end of $9$ years, and will require an additional $$46,000$ to deliver and install. The new equipment will be depreciated using $7-$yearMACRS Sweet Water intends to operate it for the full $9$ years.

The new project will require an initial increase in NWC investment of $$40,000.$

First year revenues from the new venture are expected to be $$600,000.$ Sales growth rate expected to be $4\%$ per year, costs $55\%$ of revenues and fixed costs to be $$30,000$ per year.

Sweet Water's marginal tax rate is $40\%$ and its average tax rate is $35\%.$

Calculate NPV & IRR given required rate of return $($discount rate, cost of capital$)$ of $12\%$

Should the project be accepted? Why?

Use vlookup function to calculate annual depreciation.

Perform a sensitivity analysis of the market value at the end of $9$ years on NPV for the project.