Your firm is contemplating the purchase of a new $500,000 computer-based order entry system. The system will be depreciated using the MACRS 5-year depreciation schedule. It will be worth $80,000 at the end of the project in 6 years. You will save $50,000 before taxes per year in order processing costs, and you will be able to reduce net working capital by $70,000. You will also increase sales by $100,000 per year for the first year and this number will increase by 3% per year. If the tax rate is 30 percent, and the required rate of return is 10%, what is the NPV of this project? Run a scenario analysis for the above problem using the following scenarios. (Assume the answers from question 1 represent the base scenario) Good (Prob 30%) Initial Cost Salvage Savings Sales growth rate Tax Rate $450,000 Normal $60,000 $70,000 Bad 5% 26% Bad (Prob 30%) $575,000 $25,000 $40,000 Calculate the max loss at the 5% confidence level using the standard deviation of NPY Run a sensitivity analysis on savings to NPV, sales growth rate to NPV, and taxes to NPY. There is a second project with the following summary information. Good NPV: $35,000 NPV: $20,000 (yes negative) NPV: $15,000 -1% 35% Prob 30% Prob 40% Prob 30% Assume that the Good/Normal/Bad scenarios happen jointly with the first project and that both projects are scalable. Using 10% weight increments, find the mix of the two projects that will provide the largest % drop of the standard deviation of the portfolio. Download SPY and VCSH (This is S&P 500 ETF and a Short Term Bond Index) adjusted closing prices from Nov 1, 2022 to Jan 31, 2023. Calculated the Beta for VCSH. Assume the daily risk free rate is zero. Using 10% weight increments, find the mix of the two ETFS that will provide the best Sharpe ratio.