3.	Below are the relevant financial statement details of a project. Please anwer the subsequent questions.
		Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
	Income Statement:
	Revenues		$300,000	$325,000	$350,000	$375,000	$400,000
	Cost of Goods Sold		($180,000)	($195,000)	($210,000)	($225,000)	($240,000)
	Gross Profit		$120,000	$130,000	$140,000	$150,000	$160,000
	SG&A		($30,000)	($32,500)	($35,000)	($37,500)	($40,000)
	Depreciation Expense		($50,000)	($50,000)	($50,000)	($50,000)	($50,000)
	Operating Income		$40,000	$47,500	$55,000	$62,500	$70,000
	Taxes		($16,000)	($19,000)	($22,000)	($25,000)	($28,000)
	Operating Income		$24,000	$28,500	$33,000	$37,500	$42,000
	Balance Sheet Items:
	Investments in equipment	($250,000)	$0	$0	$0	$0	$0
	Investment in working capital	($25,000)	($2,500)	($2,500)	($2,500)	($2,500)	$25,000
	Net Balance Sheet Changes	($275,000)	($2,500)	($2,500)	($2,500)	($2,500)	$25,000
a.	Calculate the projected cash flows.
		Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
	Net Income
	Addback Depreciation
	Net Balance Sheet Changes
	Cash Flows
b.	If the company requires a rate of return of at least 12% should it accept this project?
	Discount rate:
	NPV:
	Accept or Reject?
c.	Assume the following scenario: i) SG&A increases by 20% in each year, ii) Investment in equipment in Year 0 increases by 50% Should the company accept the project in this scenario? Note, the increase in the initial investment in equipment will require a corresponding change in the Depreciation. The equipment is depreciated in a straight-line and has no value remaining at the end of the project. Explain calculations.