2. Sunlight Manufacturing Company (SMC) is considering a possible entrance in the designer desk lamp market. The project's characteristics are reported in Exhibit 2-1. SMC's financial manager must estimate the project's expected cash flows over n Determine whether the investment is a value-creating propos Exhibit 2-1 ext 5 years. al Expected annual unit sales : 45,000; 40,000; 30,000; 20,000; 10,000 . Price per unit: $40 first year, then rising annually at 3%, End of year 1 to 5 *Consulting: S30,000 Already incurred company's fee Rental of building to outsiders: S10,000, End of year 1 to5 Cost of the equipment (now): S2,000,000 Depreciation: S400,000, End ofyear I to 5 *After tax Salvage S60,000, End ofyear 5 . Raw material cost/unit : $10 the first year, then rising annually at 3%. End of year 1 to 5 . Direct labor cost/unit : $5 the first year, then rising annually at 3%, End of year 1 to 5 . Energy cost/unit : $1 the first year, then rising annually at 3%, End ofyear 1 to 5 Overhead charge: 1% of sales end of year 1 to 5 . Financing charge : 12% of the net book value of assets end of year 1 to 5 Net working Capital 20% of next year sales End of year 1 to 5 . Cost of capital: 9% capital, corporate tax: 40%