Below is a summary of information related to an expansion project your company is considering:

The required equipment for the project is expected to cost $$1,250,000$ including shipping and installation costs and have a useful life of $4$ years, which is the estimated length of the project.

The equipment will be depreciated using the straight$-$line method, meaning depreciation will be the same each year.

Inventory is expected to increase $$250,000$ at the beginning of the project.

The company estimates that it will sell $2,500,000$ units in Year $1,2,250,000$ units in Year $2,2,000,000$ units in Year $3,$ and $1,750,000$ units in Year $4.$ The company expects to sell the units at $$2\mathrm{.}25$ each.

The company estimates variable costs to be $$1\mathrm{.}00$ each unit in Year $1,$$$1\mathrm{.}45$ each unit in Year $2,$$$1\mathrm{.}65$ each unit in Year $3,$ and $$1\mathrm{.}95$ each unit in Year $4.$ Fixed costs are estimated to be $$1,500,000$ each year of the project.

The estimated tax rate is expected to be $30\%.$

The company is expecting to salvage the equipment for $$200,000$ at the end of the project.

The company will no longer needed to increased inventory and expects to fully recover the $$250,000$ at the end of the project.

The finance department estimates the weighted average cost of capital to be $9\mathrm{.}5\%$ based on the risk assessment of the project.

Analyze this potential project by first calculating the expected free cash flows for each year of the project $($i$.$e$.$ years $0-4)$ and then calculate the net present value of the project. Afterward, submit a written report that covers the following information:

Discuss the expected free cash flows for each year of the project.

Below is a summary of information related to an expansion project your company is considering:

The required equipment for the project is expected to cost $$1,250,000$ including shipping and installation costs and have a useful life of $4$ years, which is the estimated length of the project.

The equipment will be depreciated using the straight$-$line method, meaning depreciation will be the same each year.

Inventory is expected to increase $$250,000$ at the beginning of the project.

The company estimates that it will sell $2,500,000$ units in Year $1,2,250,000$ units in Year $2,2,000,000$ units in Year $3,$ and $1,750,000$ units in Year $4.$ The company expects to sell the units at $$2\mathrm{.}25$ each.

The company estimates variable costs to be $$1\mathrm{.}00$ each unit in Year $1,$$$1\mathrm{.}45$ each unit in Year $2,$$$1\mathrm{.}65$ each unit in Year $3,$ and $$1\mathrm{.}95$ each unit in Year $4.$ Fixed costs are estimated to be $$1,500,000$ each year of the project.

The estimated tax rate is expected to be $30\%.$

The company is expecting to salvage the equipment for $$200,000$ at the end of the project.

The company will no longer needed to increased inventory and expects to fully recover the $$250,000$ at the end of the project.

The finance department estimates the weighted average cost of capital to be $9\mathrm{.}5\%$ based on the risk assessment of the project.

Analyze this potential project by first calculating the expected free cash flows for each year of the project $($i$.$e$.$ years $0-4)$ and then calculate the net present value of the project. Afterward, submit a written report that covers the following information:

Discuss the expected free cash flows for each year of the project.

Discuss the net present value of the project.

Discuss whether you would recommend your company pursue this project. Why or why not? Be sure to justify your position.

Discuss what other factors would be important to consider when evaluating capital budgeting projects.

Page Length: minimum of three pages double$-$spaced, not including the title page and refe page.

Your submission should adhere to APA standards.