Closed for Circa 03 (25 points) Fashion Inc. is a textile manufacturing company located in the United States. It is 2018 and knit ties have swept over all local fashion magazines lately. Fashion Inc is considering expanding its business to knitties. After some research and contion, the following findings have been reached (1) The necessary facility (plants and equipment needed to produce knitties will cost $3 million (2) Once the facility is ready. Fashion Inc. will be able to produce high-quality knitties for the subsequent three consecutive years (3) The $3 million cost can be depreciated using straight-line depreciation over the three years of production to 50,3 million (4) After the three years' operation, the salvage value of the facility is estimated to be $0.3 million (5) Fashion Inc. forecasts that sales will be 200,000 units and the price of a kittie will be S20 per unit (6) The cost of raw materials for a knittie is forecasted at 11 per unit (7) Fashion Inc. forecasts the total fixed cost is $450,000 per year (8) The discount rate of this project is estimated at 8%. The tax rate applicable is constant (9) This project has no impacts on working capital Answer the following subquestions based on the above information (a) 4 points) Suppose the facility will be prepared by December 2015 and Fashion line Fashion Inc. expects to engage in the knit tie market for the three years of 2018, 2019 and 2020. What are the EBIT. Depreciation and Net Capital Spending for each year? You can use the following table as guidance Dee 2018 Dec 2019 Dec. 2020 Dec 2011 Depreciation Inot needed ERIT not needed Net Capital Spending (b) 2 points) What is the after tas salvage value of the facility! (e) (4 points) Calculate the cash flows on this project and show them in a timeline table (d) points) Should Fashion Inc. invest in the facility to produce knitties? (H Calculate the NPV) Now the CEO of Fashion Inc. recognizes that the forecasts of the unit les cost per unit and fixed cost are subject to some uncertainties. The unit sales. cont per unit fixed cost could be 11019016 or equal to the forecasts given in finding (57 (e) (3 points) What is the base-case, best-case and worst case scenario for the sales cost per unit and fixed cost 0 points) What is the base-case, best-case, and worst case scenario NPV