12. Mont Blanc Paper Sourcing, Inc. is considering a product expansion that includes other office products. The company will need to spend $125,000 analyzing whether to launch the new product line. The life of the project is 3 years. If the company goes forward, startup costs will be $500,000. Startup costs will be depreciated in a fixed line manner. The company needs to invest $75,000 in net working capital in order to start the project. At the end of the project, the company believes salvage value of the equipment will be $90,000. The company projects that revenues will be $500,000 per year. Fixed costs will be $120,000 per year and variable costs are projected to be 40% of sales. If the tax rate is 34% and the companys required rate of return is 12%, should the company go forward with the expansion? Please show all steps and show at least 3 decision rules and the rules you are using to support your answer.

A. Build a Project Analysis Pro Forma Income Statement Below Starting with Sales:

Name of Line Item (Fill In Each)	Dollars (Fill In Each Line or Subtotal)
Sales
Net Income

B. Build a Capital Requirements Worksheet Below:

Name of Line Item	Year 0	Year 1	Year 2	Year 3
Total

C. Calculate Operating Cash Flow Below:

D. Build a Project Cash Flow Table Below (Use only 3 decision rules):

Name of Line Item	Year 0	Year 1	Year 2	Year 3
Total

E. Fill 3 of these decision rules (NPV, IRR, PB, or PI)

NPV	IRR	PB	PI

F. Will you accept the project? Why?