Initially, your team concludes that such a full$-$scale expansion would require new equipment costs

$($within existing restaurants$)$ of $$281,000,000,$ plus an additional shipping and installation costs of

$$2,500,000($to be included in the initial cost$).$ In addition, to accommodate increased cash and

inventory needs, net working capital requirements are expected to rise by $$17,000,000$ so the

refurbished restaurants will be operationally functional. The equipment is to be depreciated using a $5-$

year Modified Accelerated Cost Recovery System $($MACRS$)$ schedule. Not knowing what the

future holds, your team also concludes that this new project will exist for only $5$ years $-$ thereby

finishing in the summer of $2029.$

Adjustments to the company's operating cash flow's are expected to begin in July of $2024-$ when the

stores are deemed fully operationally functional. Also, the new equipment is expected to have a

market value of $$32,000,000$ at the project's termination.

Last, your team makes the following assumptions regarding marginal increases in sales and costs for

MMR:

$11,000,000$ units will be sold in years $1$&$2,$ at an average sales price of $$13\mathrm{.}50$ per unit,

while $13,000,000$ units will be sold in years $3,4$&$5,$ at an average sales price of $$14\mathrm{.}50$ per

unit.

Total operating costs $($both fixed and variable$)$ are anticipated to be $60\%$ of sales in years $1$

&$2,55\%$ of sales in years $3$&$4,$ and $50\%$ of sales in year $5.$

MR$\text{'}$s marginal tax rate is $21\%($used in both deriving Operating Cash Flows as well as tax

loss$/$gain in salvage value$).$

Last, you assume that MMR will raise all of the capital to finance this project only debt, using the

following assumptions: YTM $($cost of capital$)6\mathrm{.}34\%$

In order to evaluate this project, answer the following questions in deriving a cash flow analysis and

recommendation.

What is the initial cash outlay $($CFO$)?$

What are the operating cash flows in years $1$ thru $5-$adjusted for taxes and depreciation?

What are the terminal$-$year cash flows added to the operating cash flow in year $5?$

Given your results for CF$0$ thru C$05$ and the cost of capital, would you recommend that the

company take$-$on this project? Compute and explain the significance of the NPV & IRR to

support your answer.