FINANCE ASSIGMENT

Please answer the following question using excel. Need answer in chart form.

Project analysis (Pset 4)
• Your job: Determine whether HP should produce a high-end smartphone. The
project lasts 6 years.
• Investments
 $30 million in year 0 for machinery. Assume straight-line depreciation over 6 years
 Machinery will be sold for $2.5 million at the project’s end
 NWC of $3 million to begin the project, which will increase at a 4% rate each year
• Revenue and cost estimates
 $50 million in year 1, growing at 10% yearly after
 Annual operating costs of (a) $30 million fixed, and (b) variable costs of 30% of
annual revenues
• Tax rate = 30%, Discount rate = 12%
FINA 4330 | Corporate Finance
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