Tech Help Inc. has been offered a new contract. The firm needs to determine whether the contract will be profitable. The new contract will generate 825 billing hours per year, at $120 per hour for 5 years. The variable costs, labour will be $40 an hour (including fringe benefits). The fixed costs include 4 vehicles for the employees to service customers at their locations will be $600 per month per car. Other fixed costs will remain the same for the company but will be allocated to this project at $1,500 for the receptionist and office supplies per month. If Tech Help goes ahead with this project, it will lose 2,500 in net income per month. The company tax rate is 25%.

Calculate the NPV using a discount rate of 12% in the excel document titled NPV Assignment student-v4. Show the yearly incremental cash flows for this project and then calculate the NPV by discounting the net yearly cash flows. Advise your firm whether it should accept or reject this contract. Required

1. List all relevant costs. 2. Calculate the incremental cash inflows (the revenue the project will generate) 3. Calculate the total yearly costs. 4. Calculate the yearly incremental cash flows. 5. Calculate the NPV of the project. 6. Accept or reject the project.