You are a senior manager at the Superior Corporation. You ne…

Yоu аre а seniоr mаnager at the Superiоr Corporation. You need to decide whether to invest in a new product line which will generate sales for 8 years. You would invest in the new product line if there is a 5 year payback period. It is expected that there will be annual cash sales of 65,000 units at $70 per unit, variable costs will be 65% of the selling price, and cash fixed costs are $800,000 per year. Working capital will increase by $120,000. The upfront investment is $8,000,000. At the end of the 8-years, the assets will be sold for their residual value of $1,250,000. The required rate of return is 12%.   Requirement Calculate the NPV. Conclude on whether the new product line should be undertaken based on the NPV. Calculate the IRR. Calculate the payback period. Conclude on whether the new product line should be undertaken based on the payback period. Calculate the simple rate of return. Conclude on whether the new product line should be undertaken based on the simple rate of return. You have been asked by the president to calculate the tax shield based on accelerated CCA on a different investment decision. Assume the following additional information which is not relevant to any other part on this question:   Working capital will increase by $225,000. The upfront investment is $5,500,000. At the end of the 10-years, the asset will be sold for the residual value of $1,560,000. The required rate of return is 9%, there is a corporate tax rate of 26% and a CCA rate of 28%. The CEO of Superior Corporation has approved a separate project (unrelated to the above details) with an NPV of -$2,456,890. Explain what type of project the CEO may have approved with rationale for the approval.