7. A company is interested in examining the immediate implementation of a new project, the CEO has asked you to evaluate its value. You have been given the following information: Project is expected to last 5 years. The investment required to purchase the equipment is S840,000, which will be paid immediately. 1) Revenues are estimated at $250,000 in the first year. These are expected to grow by $30,000 each year over the next three years and then remain fixed in the last year Operating costs are estimated at 40% of sales each year. Assume revenues/costs are made at end of year. 2) A year ago, the company decided to evaluate demand for the project through a consulting firm, telephone surveys and focus groups examined whether there is demand for the product. By contract, payment to the consulting company for the service is $60,000 to be paid in 6 months. 3) 4) The equipment can be depreciated for tax purposes using 3-year MACRS. The Company is expected to sell the equipment at the end of the project for $80,000. 5) The company will be required to maintain working capital of20%ofannual revenues each year (investment in working capital is made at the beginning of each year). The cost of capital is 7%. The corporate tax rate is 30%, the tax rate on capital gains is 40%. It is known that the Company is profitable in its other activities. 6) Required a. Compute the Free Cash Flows (FCF) from the project. (Present in a table). b. Compute NPV and give your advice on whether or not to go ahead and accept it