3. Find out the total projected CF. Year O Year 1 Year 2 Year 3 Year 4 Year 5 Martin Enterprises needs someone to supply it with 129,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost you $930,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero salvage value over the project's life. You estimate that, in five years, this equipment could be worth $97,000 (before taxes). Your fixed production costs will be $505,000 per year, and your variable production costs should be $17.75 per carton. You also need an initial investment in net working capital of $98,000. Assume your tax rate is 24 percent and you require a return (discounting rate) of 10 percent on your investment. OCF Change in NWC Capital spending Project CF 1. Assuming that the price per carton is $26.80, prepare a pro forma income statement. Annual Net Income 4. What is the NPV of the project? Sales Variable costs Fixed costs Depreciation EBIT Taxes (24%) Net Income 2. What is the operating cash flow (OCF)? 5. What is the IRR of the project? 6. Do you want to take the project or not?