1. Quantum Graphite Limited (hereafter known as "QGL") is company that was listed on the Australian Securities Exchange (ASX). On 23 March 2023 the company had a market capitalization of $176.92 million. Quantum Graphite Limited explores, mines, processes, manufactures, and sells flake graphite and related products in Australia and internationally.

2. On 23 March 2023, the company made an ASX Announcement about its "successful completion of initial thermal purification treatment" which is part of the company's plan to mass produce "Uley graphite flakes" which are intended to be used as anode material in Li-ion batteries.

3. QGL directors expect a strong future demand in Li-ion batteries. Based on the "successful completion of initial thermal purification treatment" in March 2023, QGL asks you to assess the potential construction of a "Giga Flake factory" to produce "Uley graphite flakes".

4. In January 2023, QGL commissioned a market study on consumers' positive views on general electrification trends of transportation means, e.g., cars, trucks, ships, or planes. The study cost $250,000. There is debate amongst QGL managers whether this tax-deductible expense should be included in the financial analysis of the Giga Flake factory as a cash outflow in the year 2023 to ensure it is not wasted. The Australian Taxation Office (ATO) has confirmed that business expenses are tax deductible in the same year that the expense is incurred.

5. The factory has a ten-year useful life and is expected to incur capital costs of $1,500,000. To build the factory, QGL plans to borrow $1,000,000 today and to use $500,000 cash to fund the Giga Flake factory. QGL's accountant confirms that interest payments are classified as a business expense and are therefore tax deductible. QGL's bank has offered a $1,000,000 ten-year interest-only loan at 8.9%.

6. QGL owns that land which can be used for the new Giga Flake factory. The land is currently leased to a construction company for$50,000. If the Giga Flake factory is not built, QGL will continue the lease agreement.

7. The factory requires to purchase and install plant and equipment at a cost of $380,000 dollars. Most of the equipment will be purchased from other states and requires transportation to the new factory building at a cost of $31,000.

8. If the factory project goes ahead, QGL will engage a patent lawyer at a cost of $40,000 to protect the technology employed to produce the Uley graphite flakes.

9. QGL plans on building the Giga Flake factory in 2023. The first year of cash flow will be in 2024. In 2024, cash sales of Uley graphite flakes are expected to be 1,100,000 and management forecasts that a sales growth rate of 6% p.a.

10. Annual variable cash costs (excluding staff training) at the new factory are expected to be 26% of each year's cash sales. Annual fixed operating costs are forecast to be $220,000 in 2024 and are expected to increase at a rate of 5% p.a.

11. QGL's annual head office costs $211,000 p.a., regardless of the Giga Flake factory plan. For cost accounting purposes, QGL accountants allocate overhead costs across each business unit and projects. If the new Giga Factory goes ahead, it will be allocated $47,000 of head office costs.

12. Because of the novelty of the technology, all production staff in the new Giga Flake factory must receive training at a cost of $140,000 in the first year of operation. Due to staff turnover, it is assumed that this training will be repeated every two years after that for new staff at a cost of $50,000. The QGL accounting department does not classify training as a part of annual operating costs.

13. The Australian Taxation Office (ATO) has confirmed to QGL that for tax purposes the Giga Flake factory has a twenty-five-year life and the plant and equipment (P&E) assets have an eight-year tax life. While QGL expects that P&E assets can be operated effectively for ten years before requiring replacement, QGL's management accountant depreciates P&E assets over an operational five-year life.

14. In 2022, QGL's total marketing expense for 2023 and 2024 were already budgeted at $45,000. To promote the new Uley graphite flakes product, QGL will approve a further $235,000 of marketing in 2023 only. QGL managers are worried about the impact of this high marketing expense on the 2023 income and they have suggested that the company's entire 2023 marketing expense should be expensed over the new factory's ten-year useful life.

15. The repairs and maintenance expense associated with the Giga Flake factory are estimated at $100,000 for the first five years. After that, QGL expects this amount to double for the rest of the factory's ten-year useful life.

16. QGL will implement a private placement in 2028 to raise an additional$1 million in cash. These funds will be used to develop new technologies outside of the Uley graphite flake technology.

17. QGL assumes that the Giga Flake factory building can be sold for

$700,000 in the year 2033. At that time (i.e., in 2033), the resale value of the plant and equipment is $100,000.

18. The salary of QGL's Chief Executive Officer $470,000 in 2023 and is not expected to change whether the new Giga Flake factory is approved by the QGL's Board of Directors or not.

19. If the Board approves the new flake Giga Flake factory, QGL anticipates that it will require inventory to increase to $321,000 today compared with the existing amount of $45,000. In addition, Accounts Payable is expected to increase by $155,000 to $198,000. Further, the Accounts Receivable balance will increase from the current level of$15,000 to $435,000.

20. QGL has a required rate of return of 15%. Assume the company tax rate will remain at 30%.

Based on the Information above and using financial knowledge and principles, provide

1. The cash flows at the start

2. The cash flows over the life

3. The cash flows at the end

4. What is the NPV of the proposed Giga Flake factory, and your recommendation?

Give the cash-flows in the format of the template below and return please. Also please give working out and explanation.

1. Cash Flows at the start Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 TEAM MEMBER STUDENT ID STUDENT NAME Total 2. Cash Flows over the life Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total 3. Cash flows at the end Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Grand total for each year PV of CF in each year