1 Q1. ABC Company is studying a project that would have a five year life and 2 require a $1,600,000 investmentin equipment. At the end of five years, the 3 project would terminate and the equipment would have no value left over. 4 The project would provide net income each year as follows: 5 6 Sales 7 Less COGS 8 Gross Margin 2018 2,800,000 300,000 2,500,000 9 10 Less: Operating Expenses 11 Advertising, Salaries and other fixed 1,050,000 12 Salary expense 1,100,000 13 Utility Expense accrued 60,000 14 Amortization 100,000 15 Total Expenses 2,310,000 16 17 18 Net Income 19 20 The company's discount rate is 18% 21 22 1) compute the net annual cash inflow from project 23 24 2) compute the net present value of the project. Is it acceptable? 25 190,000 + 5 H