Use the attached grid to calculate the NPV for the project and answer the following questions

NPV Superswift Fleets

Superswift Fleets is considering investing in a new automated packaging line that costs R$3,000,000.$

The new automated packaging line has a useful life of five years and is expected to produce before$-$tax cash flows $($EBIT$)$ of R$1,500,000$ in Year $1.$ This

will grow by inflation of $6\%$ a year from Year $2$ to Year $5.$

In addition, upfront installation costs of R$500000$ are anticipated, and additional upfront net working capital requirements are R$500000.$

Assume that the working capital and the installation costs are recouped as a cash inflow in Year $5$

Superswift Fleet's nominal cost of capital is $25\%,$ the interest rate is $10\%,$ the tax rate is $27\%,$ and tax is paid in the same year that cash flows are

received.

Assume that the cash flows are earned at the end of the year and a full year can be used in the present value calculation.

SuperSwift Fleets NPV$-2.$xlsx darr

Question $17$

Which of the following options are the forecasted EBIT $($R$\text{'}000\text{'}$s$)$ amounts for years $1$ to $5?$

A$.$ Year $5$: $1,894$

B$.$ Year $4$: $1,787$

C$.$ Year $3$: $1,685$

D$.$ Year $2$: $1,590$

E$.$ Year$1$: $1,500$

Question $18$

What is the depreciation amount $($R $000\text{'}$s$)$ for each year of the forecast?

A$.750$

B$.300$

C$.0$

D$.600$

Question $19$

What is the free cash flow in Year $0?$

A$.0$

B$.-4,000$

C$.-5,000$

D$.-3,000$

Question $20$

What is the free cash flow for Year $5?$

A$.2,894$

B$.2,112$

C$.1,382$

D$.1,747$

Question $21$

What is the NPV for the project?

A$.1,246$

B$.1,127$

C$.1,007$

D$.1,426$

Question $22$

Which option is the correct course of action Superswift Fleets?

A$.$ Accept the project because the NPV is positive

B$.$ Reject the project because the NPV is positive

C$.$ Reject the project because the NPV is negative

D$.$ Accept the project because the NPV is negative

Question $23$

Adjust the EBITDA in Year $1$ until your NPV becomes zero. You can use the Goal Seek function in Excel to help you.

A$.978$

B$.933$

C$.922$

D$.1,003$ Superswift Fleets will depreciate the asset over four years at $\backslash (25\backslash \%\backslash )$ a year on a straight line basis for tax purposes.

In addition, installation costs of R$500000$ are anticipated and additional upfront net working capital requirements for the line of R$500000$ are expected.

Assume that the working capital is recouped as a cash inflow in Year $5$

Superswift Fleets nominal cost of capital is $\backslash (25\backslash \%\backslash ),$ the interest rate is $\backslash (10\backslash \%\backslash ),$ the tax rate is $\backslash (27\backslash \%\backslash )$ and tax is paid in the same year that cash flows are received.

a$)$ Advise the directors whether to accept or reject the project.

b$)$ What is the minimum EBITDA in Year $1$ required to make the project viable?

HINTS:

$-$ Calculate NOPAT $=$ EBIT $-$ Tax

$-$ Assume that the cashflows are earned at the end of the year.