Yoders Equine Products, Inc. (YEP) is a producer and online retailer of equine care products. Recently, YEP management had the idea of producing their own Portable Shoeing Stock to add to their existing equine care product line.

Fixed assets for the project will have a tax inclusive cost of $97,000. Shipping for the fixed assets will be $1,400. Installation of the new machinery will run $600. The fixed assets associated with this project have a 5-year MACRS class life. It is expected that the fixed assets will be sold at the end of the project for $8,000.

Selling and Administrative expense for the project is independent of the level of sales, and is estimated at $160,000 for all years of the project. Net Working Capital requirements for the project at the start of the project are $25,000 (time zero) and then will be 7% of dollar sales in each period of the project with the entire final years balance of NWC being recaptured at the very end of the project.

If the firm has a WACC of 11% and a tax rate of 21%, should the project be undertaken? Prepare a spreadsheet similar to the Power Mulcher Project example discussed in class and in the textbook. Calculate the YEP projects NPV, IRR, and Payback.

The YEP Portable Shoeing Stock will have several innovative features include the ability to be easily dismantled for storage and transportation. The firms managers expect the product to be viable for just five years due to their past experience with larger firms copying YEPs innovative products and undercutting the firms prices. The following table contains estimates of key inputs for each year of the project. Year	1	2	3	4	5
Units	1,100	1,200	1,300	1,000	900
Price Per Unit	$725	$820	$ 830	$ 725	$ 700
Variable Cost per Unit	$ 535	$ 550	$ 605	$ 648	$ 665