(b) Pizza Hat is considering a new line of business selling donuts. This new business operation will require the company to purchase new deep-frying machines that will cost $1.44 million. These costs will be depreciated on a straight-line basis to zero over three years. At the end of three years, the company will exit from this business operation and sell pancakes instead. Pizza Hat will then sell the machines at an estimated market value of $310,000. The donuts project is expected to generate $1.8 million in sales each year. The operating costs are expected to be $955,000 per year. Working capital of $450,000 will be required from the outset and no additional allocation needs to be made to working capital. The company tax rate is 35% and the donut project's required rate of return is 12% p.a. to working project's required rate of return is 12% p.a. (i) What total investment is required at the start of the project? (Ensure you detail each component in your answer) [2 marks] (ii) What is the project's total net cash flow in Years' 1 and 2? (Ensure you detail each component in your answer 15 marks) (iii) What is the project's total net cash flow in Year 3? (Ensure you detail each component in your answer) (4 marks] (iv) What is the project's net present value? Do you recommend it be accepted by Pizza Hat? [2 marks) Sheet Semester 2, 2020 FVPV[1 + (x)] CP PV (..) - 5,- FV = P(1 + r)" PV CF TO PU PV = FY (1+r) V = CF (1+r wol + wc +2wwa Effective rate= (1+hom V DE WACC Crew)+w.) Simple interest rateX(1 + compound interest rate-1 waccrx ww+16)* FV = PVM + WACCUM)=(1-1). w.)+,xw.) PV Die CF (1+)' FV (1+r) wace - trax.+ (7-18 -->)