A public trading beef processing company is considering building a wind mill farm to generate electricity to meet the needs of its operations. The company has estimated the following data for its wind mill farm project:

• Expected life: 4 years

• Total initial investment of all depreciable assets: $12.0 million

• Total salvage value of all depreciable assets at the end of year 4: $3.5 million

• Total after tax disposal, G all depreciable assets at the end of year 4: $3.0 million

• Working capital: $175,000 required starting in year 2

• Total initial capital expenditure excluding all the depreciable assets and working capital: $3.0 million

• Tax Rate: 35%

• Project financing: The company will finance all the initial capital expenditures as follows:

  • Using their own money: $5.0 million, and the remaining through the following Capital Financing Structure:

    • Capital Financing Structure; Debt Ratio: 30%

• Debt financing: Loan and Bond

  • Loan: interest rate 5%; loan term 4 years; method of loan payment, equal annual payments method

  • Bond 60% allocation: Bonds mature at the end of year 5.

    • Bond data:

• Equity financing: Common Shares.

  • Retained earnings: $750,000

  • Common share data:

• The company has produced a partial Net Income statement (see next page).

Your task is to:

1. Complete the Net Income Statement provided.

2. complete the cash flow statement