At Little Green Apple Produce the owner is considering buying a new large walk in cooler for fruits and vegetables. The new cooler cost $150,000. The annual maintenance cost will be $7,000 starting in year two (the first year will be covered under warrantee). An additional employee will be needed to stock the cooler. The employee will make $16/hr, and start part-time at 20 hours per week. Sale of produce will increase by $100,000 in year one and an additional 10% in year two and 15% in year three. The cost of produce will increase $30,000 in year one and is variable with sales. The part-time employees hours will vary based on additional sales in years two and three. The employee will receive raises of 4% annually and electricity will increase 3% a year. There is no inflation on any other item. Based on this information prepare a pro forma and calculate the project NPV using a 9% discount rate/hurdle rate and calculate the IRR. State if the project should be expected or rejected. please use excel formula to solve the problem
At Little Green Apple Produce the owner is considering buying a new large walk in cooler for fruits and vegetables. The new cooler cost $150,000. The annual maintenance cost will be $7,000 starting in year two (the first year will be covered under warrantee). An additional employee will be needed to stock the cooler. The employee will make $16/hr, and start part-time at 20 hours per week. Sale of produce will increase by $100,000 in year one and an additional 10% in year two and 15% in year three. The cost of produce will increase $30,000 in year one and is variable with sales. The part-time employees hours will vary based on additional sales in years two and three. The employee will receive raises of 4% annually and electricity will increase 3% a year. There is no inflation on any other item.
Based on this information prepare a pro forma and calculate the project NPV using a 9% discount rate/hurdle rate and calculate the
please use excel formula to solve the problem
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