(a) Compute the projected annual cash flow of three cases in dollars.

(b) Compute the projected operating gains/losses over the four-year horizon as the discounted present value of change in cash flows, which is due to the pound depreciation, from the benchmark case. Use a discount rate of 15%.

\begin{tabular}{|l|l|l|l|l|} \hline & Benchmark & Case 1 & Case 2 & Case 3 \\ \hline Sales & 50,000 & 50,000 & 50,000 & 40,000 \\ \hline Imported input in \$ & 512 & 512 & 512 & 512 \\ \hline FX rate (\$/) & 1.6 & 1.5 & 1.5 & 1.5 \\ \hline Imported input in & 320 & 341 & 341 & 341 \\ \hline Local input in & 330 & 330 & 330 & 356 \\ \hline Unit variable cost in & 650 & 671 & 671 & 697 \\ \hline Inflation & 8% & 8% & 8% & 8% \\ \hline \end{tabular}