A new factory at Arcataa requires an initial outlay of $1 Million. Of this $1 Million, $400,000 Must be paid immediately and $200,000 will be paid at the end of each year for the next 3 years. At the end of the 3-year construcion period the factory will go into service and will last for 10 yaers, after which it can be sold for a salvage value of 200,000$. sales will be $1 million during the first year of operation and will grow at a rate of 10 perent a year after that. Variable costs will be 50 percent of sales and fixed costs will be $300,000 a year. all costs are in cash. Assume cash flows occure at year-end. At a 10 percent required return, is the factory an attractive investment? if there are 1000 sahres outstanding, how much wealth per share has been created?
THE ANSWER HAS TO BE IN EXCEL