Vandelay Corporation is in the business of manufocturing parts for cars and is expanding its business in USA. The company is considerine an additional plant in Teas. The following information has been gathered to assess this project: The initial investment required is USD 5 milion. Inflation in US is projected to be 2% for next 5 yars. Project manager expects the year 1 price per unit is $18 will remain constant for neot five years. it is also expected the project will run 4006 capacify in year 1 , 50% in year 2,800 in year 3 , and 1005 for year 4 and 5 . The maximum plant capocity is 1,000,000 uavits per year. The wariable costs will increase by rate of inflation in US. The varisble costs for the year 1 is USD 10 . The sales and general expenses are expected to be 15$ of the total sales. The investment in Plant and equipment is USD 2 maltion. It will be fully depreciate in 5 years. The US corporate tax rate is 35%. The charges to NVC is 3 . of sabes revenue. The plant wifl experience no additional capital expenditure. The interest expenees is 5500000 per year and will remain same. The propect will be terminated in Year 5. The terminal valie of the project is the present value of perpetual free cash flow in the Sth year. The gruwth rate in cash flow is assumed to be rero. the WACc for the project is 10.75% Required: a) Corstruct the Free cathiliow for the project for 5 years. b) Calculate the NiV and ter for the propect. c) shoudd you accept or rejed the project. Find her orthe piged 16354.74 29.M4rite 14707296 QUESTION 16 Sec Question 15 abere for deteile Fred ipht of the prating. 55\%: Carnstber evingied (mike) Vandelay Corporation is in the business of manufacturing parts for cars and is expanding its husiness in USA. The company is considering an additional plant in Texas. The following information has been gathered to assess this project: The initial investment required is USD 5 million. Inflation in US is projected to be 2% for next 5 years. Project manager expects the year 1 price per unit is $18 will remain constant for next five years. It is also expected the project will run 40% capacity in year 1,50% in year 2,80% in year 3 , and 100% for year 4 and 5 . The maximum plant capacity is 1,000,000 units per year. The variable costs will increase by rate of inflation in US. The variable costs for the year 1 is USD 10. The sales and general expenses are expected to be 15% of the total sales. The investment in Plant and equipment is usD 2 million. It will be fully depreciate in 5 years. The US corporate tax rate is 35%. The changes to NWC is 3% of sales revenue. The plant will experience no additional capital expenditure. The interest expenses is $500,000 per year and will remain same. The project will be terminated in Year 5 . The terminal value of the project is the present value of perpetual free cash flow in the 5 th year. The growth rate in cash flow is assumed to be zero. The WAClafor the project is 10.75% Required: a) Construct the Free cashflow for the project for 5 vears. b) Calculate the NDV and IRR for the project. c) Should you accept or reject the project. Find Nipv ethepoied 16354714 21,34714 14767236 Question 16 Sen Ouevion is allere for detailis