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(Calculating cash flows-comprehensive problem) The Shome Corporation, a fim in the 34 percent marginal tax brackot with a required rate of reaum of discount rate

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(Calculating cash flows-comprehensive problem) The Shome Corporation, a fim in the 34 percent marginal tax brackot with a required rate of reaum of discount rate of 15 peroent, is considering a new projoct. This proiect involves the introdoction of a new product. This projoct is expocted to last 5 years and then, because this is sorneshat of a fad pecject, it werli be terminated. Given the following information, appropriate decinion criteria. datermine the not cash fows assoclated wath the project, the projects net present value, the profitablity index, and the intornal rate af roturn. Apply the a. Detormine the free cash floms associated with the project The FCF in year 0 is 1 (Round to the nearest dollar) The FCF in year 1 is 5 (Round to the nearest doliar) The FCF in year 2 is $ (Round to the nearest dollar.) The FCF la year 3 is 5 (Round to the nearest dollar) The FCF in year 4 is (Round to the noarost dofine.) The FCF in yoar 5 is } (Round to the nearest dollac) b. The net present value (NPV) of the peoject is 4 (Round to the nearest doliar) c. The profitabilty indox (P) of the project is (Aound to the decimal places) d. The intemal rale of rotum (Rax) of the project is \%. (Round ta fwo decima( places) 2. Should Shome accept this new projedt (Seled the best tholce beliow) A. Yes. The project should be accepted becasus its NPV in poeitive, the Pi is greaker than one, and the ifR is greater than the recuired rate of rotum, 15: B. Yes. The project should be accephed because it NPPV is posibve, the PI is less than one, and the IRR is less than the reguired rate of retum. 15% c. No. The project should te rejected becaune tix NPV is negative, the PP is lese than one, and the IRR is less than the roquired male of rehum, 15\%F D. Mare intormation is needed to make this decision. Cost of new plant and equipment: $6,900,000 Shipping and installation costs: $100,000 Unit sales

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