A company with a project for an industrial boots plant wants to evaluate it for 3 years. The company will only sell pairs of industrial boots to the final consumer at a price of $42.00 the pair of boots, in cash. Projecting to sell 5,000 units the first year and from then on forward increase sales by 10% each year.The initial investment is estimated at $50,000.00, for which it will contribute $10,000 of its own capital and $40,000.00 will be acquired through a credit for a 5-year term, paying annual installments of $11,000.00, of which $6,000.00 would be interest. Unit production costs are $30 per pair of boots, of which $24 are production costs. variables and 6 are fixed. Depreciation equals 20% of production costs. Annual administration costs are $15,000.00 and marketing costs are $18,000.00. $ these remain constant throughout the life of the project. Of these two costs the 25 % of them, corresponds to depreciation. and. Income taxes are 25% on net income.The company will not distribute dividends at the end of the period.

Determine annual cash flow and income statement for the 3 years of the project, the IRR and B/C, at a AARR of 20%. (40%)