Using an Excel spreadsheet, please complete the calculations for this cost-saving problem.

Assumptions:

Smithfield Production, Inc. is considering investing in a new conveyor system for its distribution warehouse. The estimated cost of this conveyor system is $1,200,000. The conveyor system is estimated to have a four-year useful life and will be depreciated using the straight-line method. No salvage value is expected at the end of the machines life on December 31, Year 4.

Further, assume an annual inflation rate beginning in Year 2 of 3.0% per year. The firms income tax rate is 32.0%.

Year One values for the following have been provided to you by Smithfield Production, Inc.s Accounting Department:

Account	Year One Value
Revenues	$19,000,000
Product and Labor Cost	$13,425,000
Other Cash Expenses	$3,750,000

Note that each of the accounts listed above is expected to increase annually by the 3.0% inflation rate.

Annual Depreciation Expense on the firms currently owned fixed assets is expected to remain at $525,000 per year throughout the four-year analysis.

Given the above assumptions, prepare projected Income Statements for Smithfield Production, Inc., listing Revenues to After-Tax Profit accounts for Years 14.