Answer each subquestion with workings and show it$.$ Be as detailed as possible.

You are the president of Lion Pride Inc. and considering adding a second location at Venice

Beach. You estimate the new location will cost $$18,000,000$ to build and will result in $$7,000,000$ of annual revenues and $$3,000,000$ of operating costs each year, for eight years. The new building will be depreciated using the $5-$year MACRs rates, and you estimate it will be sold after eight years for $$4,500,000.$ Alternatively, you have an offer from a potential buyer to purchase the land for $$3,000,000$ tomorrow. Lion Pride Inc. is subject to a $20\%$ tax rate and can finance this project at $6\%.$

a$.$ What are the periodic cash flows

associated with the project?

b$.$ Based on the NPV rule, should you commence with the building plan?

C$.$ Based on the IRR rule, should you commence with the building plan?

d$.$ If management determines the project is viable only if it has a discounted payback of less than or equal to six years, should you commence with the building plan?

e$.$ What is the expansion's profitability index?