Assignment 6.5 Mini-Case Study: Capital Budgeting with Fresnel Lenses Fresnel Enterprises, Inc. is embarking on a new venture with a partner manufacturing company China. Fresn new line of screen guards for smartphones that not only protect screens, but also act as a magnifying glass. new screen guards to be particularly popular with retirees in the United States, so are already planning a mar targeting the Florida and Arizona markets. However, while Fresnel can manage design, marketing, and distribution in the United States, they have little m expertise. So they have hired a contract manufacturer in China to handle actual production. Fresne will supp investment dollars needed to set up the production and assembly lines in China, and then pay their partner a each unit produced. Since they are handling distribution, there will also be some working capital investments Fresnel is planning a 5-year time horizon for this project. At the end of year 5, the company will liquidate the a project. All assets will have been fully depreciated. A list of facts and assumptions, including sales forecasts project, are given in the tables to the right =zazz==> Provide a financial analysis of this project to help determine if it should be pursued: a) Using the information provided, create simple income statements for each year of the project. Calculate th Operating Income (EBIT) and Net Income. b) Create an analysis of the Working Capital needs and changes for each year (see the table at the top of pag textbook for an example). () Determine the Free Cash Flow for each year of the project. cd) Calculate the project's NPV, BCR, and IRR. :) Based on your analysis. very briefly explain whether this project should be pursued and why. Create your Original Solution Below - Be sure to show all calculations, to carefully complete all parts o Fresnel Enterprises Screen Guard Project- Pro Forma Income Statements Year 1 Year 2 Year 3 Year 4 Sales 250,000.00 $ 650,000.00 $ 850,000.00 $ 800,000.00 Cost of Goods Sold 87.500.00 $ 2 227.500.00 $ 297.500.00 $ 280,000.00 Selling & Administrative 95.000.00 $ 95.000.00 $ 95.000.00 $ 95.000.00 EBIT (Operating Income) $ 67.500.00 $ 327,500.00 $ 457,500.00 $ 425,000.00 Depreciation $ 135,000.00 $ 135,000.00 $ 135,000.00 $ 135,000.00 Interest EBT (67.500.00) $ 192,500.00 $ 322,500.00 290,000.00 Taxes (14.175.00) $ 40,425.00 $ 67,725.00 60.900.00 Net Income $ (53.325.00) $ 152,075.00 $ 254,775.00 $ 229,100.00 Fresnel Enterprises Screen Guard Project- Working Capital Analysis Year 0 Year 1 Year 2 Year 3 Year 4 Working Capital Need 62.500.00 $ 0 $ 162,500.00 $ 212,500.00 $ 200,000.00 WC Change 62.500.00 $ 100,000.00 $ 50.000.00 $ (12,500.00)