2. The following I/S is based on the information associated with a new project. Answer the questions. Projected Income Statements Year 24 Sales Variable Cost Fixed Cost Depreciation EBIT Taxes (40%- Net income 9,000,000 5,000,000 4 2,500,0004 750,000 750,000 300,000 450,000 9,000,000 5,000,000 2,500,000 750,000 750,000 300,000 450,000 9,000,000 5,000,000 4 2,500,0004 750,000 750,0004 300,0004 450,0004 4e 9,000,000 5,000,000 2,500,000 750,000 750,000 300,000 450,000 I) We plan to invest $3,000,000 to get started. The residual book value of the new equipment is zero at Year 4 while it will be sold for $300,000. Moreover, we save $50,000 in the net working capital (NWC) at the beginning of the project. The tax rate is 40%. Fill out the projected cash flow table. (80points) Projected Cash Flows Yeard 12 22 a 0 11. OCF Changes in NWC- - 3,000,000 Capital spending Total Cash Flowe LCD ( II) Figure out the net present value (NPV) of this project if the required return is 20%. Based on the NPV, do you accept or reject this project? (30points) III) Based on the NPV above, do you expect IRR to be higher or lower than the required return of 20%? (30points) I I I IV) Figure out the Modified Internal Rate of Return (MIRR) for this project if the required return is 20%. If the cutoff is 30%, do you accept or reject this project? (30points)