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AGC Automotive is considering a project to supply Tesla Model V car with 30,000 windshields annually for automobile production. This project will need an initial

AGC Automotive is considering a project to supply Tesla Model V car with 30,000 windshields annually for automobile production. This project will need an initial $4.3 million investment in equipment to get the project started; the project will last for five years. The accounting department estimates that annual fixed costs will be $1.025 million and that variable costs should be$190 per windshield; accounting will depreciate the initial fixed asset investment straight-line to zero over the five-year project life. It also estimates a salvage value of $400,000 after dismantling costs. The marketing department estimates that Tesla will agree with a price of $290 per windshield. The engineering department estimates you will need an initial net working capital investment of $450,000. You face a tax rate of 22 percent on this project. a. What is the depreciation amount in each year? (1 marks) b. What is the after-tax salvage value for the initial investment? (2 marks) c. What are the operating cash flows in each year, i.e, year 1, year 2, year3, year 4, and year 5? (4 marks) d. What are the cash flows from net working capital in year 0 and year 5? (4 marks) e. What are the CFFA in each year, i.e, year 0, year 1, year 2, year3, year 4, and year 5? (6 marks) f. If the required return is 15% for a similar risk level of project, should the company implement this project? (5 marks)

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