Question: Please help me!!! Determine the free cash flows associated with the project, the project's net present value, the profitability index, and the internal rate of

Please help me!!!

Determine the free cash flows associated with the project, the project's net present value, the profitability index, and the internal rate of return. Apply the appropriate decision criteria.

Trade WindsCorporation, a firm in the 21 percent marginal tax bracket with a required rate of return or cost of capital of 15 percent is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years andthen, because this is somewhat of a fadproduct, be terminated.

Cost of new plant and equipment 14,800,000

Shipping and installation cost 200,000

Year units sold

1 70,000

2 120,000

3 120,000

4 80,000

5 70,000

Sales price per unit: $300/unit in years 1 through 4, $250/unit in year 5

Variable cost per unit: $140/unit

Annual fixed costs: $700,000 peryears in year 1-5

Working Capital requirements: There will be an initial working-capital requirement of

$200,000 just to get production started. For each year, the total investment in net working capital will be equal to10 percent of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 and 2, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5.

-determine the free cash flows associated with theproject, theproject's net presentvalue, the profitabilityindex, and the internal rate of return. Apply the appropriate decision criteria.

Depreciation method: Bonus depreciation method, and as a result the bonus depreciation occurs in year 1, with no depreciation in any other years. If any losses occur, they would be offset by profits in other areas of the company.

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