QUESTION 5 Lowell Inc. projects unit sales for a new project with a life of FOUR YEARS as follows Year M P p Production will require Lowell must have an amount of NOWC on hand equal to 8 percent of the upcoming year's sales. Total fixed costs are $100.000 per year, variable production costs ene $200 per unit, and the units are priced at $300 each. The sale price and variable costs will increase by 2 percent every year. The equipment needed to begin production has an instaled cost of $2,000,000. The equipment qualifies as 5-year MACRS property Years Depreciation rate 20% Unit Salas 10.000 2.000 14,000 16.000 2 32% b 19% 4 12% In FOUR years, this equipment can be sold for about 10 percent of its acquisition cost, Lowell is in the 25 percent marginal tax bracket and t estimates, what is the Eres Cash Flow for the Year of the project? Free cash flow Total initial investment Total annual project CF Tobal Salvage Value 2,330,000 -2.240,000 -2.300.000 -2.300.000 sa required return on al its projects of 18 percent. Based on these preliminary project