Auto Inc. is considering a five-year investment in a plant that will cost $50,000. The plant produces 3,000 widgets annually. At the end of the year, the variable cost is $9.00 per widget, the sales price is $14.50 per widget, and the fixed costs are $1,500 annually. The sales price is growing annually by 4.5% and variable cost is growing annually by 3%. The cost of the plant is depreciated over 6 years at the following rates: 20%, 32%, 19.2%, 11.52%, 11.52%, and 5.76%. The salvage value after five years is $4,500. The appropriate nominal discount rate is 12% and the corporate tax rate is 21%. The required net working capital is $2,500 per year and it is recovered at the end of the project. The company expects to sell all widgets produced each year.
1. Calculate the NPV of this project, USE EXCEL TO SOLVE THIS PROBLEM