Reference no: EM132949759
Question - Create a fresh 1-page, single-tab Excel spreadsheet similar to the attached template, which you can revise, to analyze and evaluate the following project:
RealityView, LLC. is a pioneering company in 3-D imaging technology. The company, which is currently operating at its full capacity, is considering a capacity-increase investment project. The project requires an initial outlay of $28.5 million that includes $25 million for new equipment expected to last 5 years with zero-book value and $3.5 million for working capital. The selling price of each system is $40,000. Through options and futures contracts, the company plans to keep variable costs per system to 60% of the price. The project requires $4 million/year of fixed cost. As a result of the proposed expansion, annual sales are expected to increase by 2,000 a year during the project's life. The hurdle rate for the project is 10% per year, and the project CF will be reinvested at 15%. The Federal-to-state tax rate is 25%.
1. Calculate NPV, IRR, PI, and MIRR? Should the company accept the project?
2. Use the CCF method to calculate conventional and discounted payback periods.
3. Calculate the breakeven level of production.
4. Calculate the zero-NPV level of production.
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