ACCT 5550 Managerial Finance Name: Assignment #3 5% of your Final Grade Submission Reguirements Emailed assignments will not be accepted. Late assignments will not be accepted. Your solution must be handwritten and sca ngghoto of your work submitted as an attachment via BB. Please submit only page 2 and 3 Appendix A and B. Scenario Your CEO has asked you to evaluate launching a new product line for your company. Based on your experience and knowledge of the market, you have estimated the following results for the first five {5} yea rs of the Project. 0 Expected revenues: Year '0005 1 2 3 4 5 $80.00 $120.00 $150.00 $300.00 $360.00 - The Company yearly purchases {Cost Of Goods Sold COGS) from suppliers = 50% of the forecasted sales. 0 General and administrative expenses (wages, taxes, office etc.) are estimated at 15% of sales. 0 Sales salaries and commissions are estimated to be 10% of sales. 0 The Project requires and initial equipment investment of $150,000. 0 Annual depreciation expense of the equipment is $50,000. 0 Annual interest expense on the money borrowed to pay forthe equipment is $18,000. 0 The company tax rate is 35%. 1. Question #1 {10 marks) 0 Using the above projections and the template in Appendix A build a Pro-forma Income Statement for each year ofthe Project. 0 In the template below the Income Statement calculate the Operating Cash Flows and Total Cash Flows for each year. 2. Question #2 (10 marks) Using your initial investment and Total Cash Flows from Question #1 calculate the following for the Project. a. Net Present Value Payback {Breakeve n} Discounted Payback {Breakeve n} Internal Rate of Return Profitability Index [00.00- The company can borrow at 15% for the initial purchase of the equipment. Question #3 (10 marks 300-500 words! Based on questions 1 & 2 above, and the following management benchmarks, comment on whetherthe company should move forward with the Project. What otherthings might you consider in making your decision? Management Benchmark a. Net Present Value Positive b. Payback {Breakeven} 20% c. Profitability Index > 1 e. Discounted Payback {Brea keven]