Project cash flow and NPV.The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds(1957 replicas). The necessary foundry equipment will cost a total of $3,800,000 and will be depreciated using afive-year MACRSlife, LOADING...

. Projected sales in annual units for the next five years are 300 per year. If the sales price is $27,000 percar, variable costs are $16,000 percar, and fixed costs are $1,200,000 annually, what is the annual operating cash flow if the tax rate is 38%? The equipment is sold for salvage for $550,000 at the end of year five. What is theafter-tax cash flow of thesalvage? Net working capital increases by $600,000 at the beginning of the project(year 0) and is reduced back to its original level in the final year. What is the incremental cash flow of theproject? Using a discount rate of 11% for theproject, determine whether the project should be accepted or rejected according to the NPV decision model.

First, what is the annual operating cash flow of the project for year1?

******Please note this has several parts********

Year 3-Year 5-Year 7-Year 10-Year

1 33.33% 20.00% 14.29% 10.00%

2 44.45% 32.00% 24.49% 18.00%

3 14.81% 19.20% 17.49% 14.40%

4 7.41% 11.52% 12.49% 11.52%

5 11.52% 8.93% 9.22%

6 5.76% 8.93% 7.37%

7 8.93% 6.55%

8 4.45% 6.55%

9 6.55%

10 6.55%

11 3.28%