4)(6 points) Remark: all the dollar value below should be considered "fair (true) market values" i.e. any prospective buyer/seller would gladly pay themYou are pitching the following investment idea to your client (a local - very profitable - furniture making company). If the project is undertaken, you will earn extra compensation - to be paid immediately - for being able to identify and start the project equal to \(\$ 50,000\). The dollar amount of the extra compensation would be tax deductible.- For the next 8 years, the client will build wooden cabinets. Next year, he will sell 1,100 cabinets, and every year after that, the sales are expected to grow by 210 cabinets per year.- The price per cabinet is expected to be \(\$ 100\); the cost of wood is expected to be \(\$ 40\) per cabinet, and other variable costs another \(\$ 11\) per cabinet. (All prices are expected to remain constant for the next 8 years.) In addition, he expects to pay fixed costs of \(\$ 2,100\) per year.- The project requires immediate initial capital asset investment (a special machine) worth \(\$ 600,000\). This investment would have to be paid in cash. The value of capital investment is to be depreciated straight-line over 20 YEARS (note: even though the project takes only 8 years, it is very well possible that the time of depreciation may be completely different from the maturity of the project.). It is expected that the initial asset investment will be sold after 8 years for the (salvage) price of \(\$ 320,000\).- Even though the project-related sales will stop in Year 8, the project is associated with significant clean-up costs resulting in Year \(9\mathrm{FCF}=-\$ 80,000\) and Year \(10\mathrm{FCF}=-\$ 70,000\)(and the clean-up costs are the ONLY cash flows associated with the project in years 9 and 10)..- Initial net working capital (NWC) investment is \(\$ 100,000\)(to be paid immediately) and NWC will have to increase by \(\$ 15,000\) per year thereafter.- The tax rate is \(21\%\) and the required rate of return carries a \(6.75\%\) premium over the risk free rate with maturity matching that of the project.A) If the company decides to undertake the project, what are the annual levels of total free cash flows associated with the projects in each of the years \(0,1,2\ldots 10\)?(Note: you MUST provide step-by-step calculations of FCFs)B) What is the NPV of the project?C) What is the Internal Rate of Return (IRR) of the project?D) Ultimately, should your client undertake this project?E) Assume a little different scenario:your client would not have to pay a dime for the special machine worth \(\$ 600,000\). He actually already owns this machine. The machine was purchased 1 year ago for \(\$ 800,000\), and it currently stands idle in your client's factory.Will the NPV of the project change under these new circumstances? How much? Should your client undertake the project in this case? Why or why not?