$(8$ pts$)$Roanoke Steel Company has decided to purchase Galax Steel Fabricators for

$$7,000,000.$ They have projected incremental gross sales to be $$1,500,000$ in year $1$

and then increasing $10\%$ per year thereafter. Further, they expect their gross profit

margin to be $25\%$ in xrs $1-5_{{?}_{?}}$ increasing to $35\%$ in years $6-10.$ Operating expenses are

expected to remain flat at $40\%$ of gross profit, of which $20\%$ of operating expenses will

be depreciation for each year. Roanoke Steel has a policy of making $20\%$ on all capital

expenditure projects

A$.$ Calculate the net cash flow for each year $($Essentially$,$ you need to develop an income

statement for each of the $10$ years given the parameters explained above. Remember the special

treatment for depreciation$)$

B$.$ Calculate the net present value of this project

C$.$ Is this a $"$go$"$ or $"$no go$"$ project for Roanoke Steel

D$.$ Is the internal rate of return higher or lower than $20\%$