Complete the following mini-case. You may work in groups with a maximum of 3 members. Submit a word document that answers the questions and an Excel spreadsheet that supports all your calculations. Fashion House, Lulu Designs, recently hired you as an assistant to the CFO. Your first task is evaluating whether Lulu should expand by developing a new lingerie line. Your research reflects the following information: You expect the proposed project to span the next five years. Current estimates indicate sales will be 200,000 units in year one with 15% sales growth over the following 2 years and 6% growth in the final 2 years. The unit price in Year 1 is $50. Given estimated demand and inflationary pressure, prices are expected to rise by 5% each subsequent year. The project requires purchasing new equipment worth $3 million, after installation. The new equipment is state-of-the-art, so you expect to be able to sell it for $500,000 when the project ends. As a result of the project, current assets would increase by $750,000, and payables would increase by $450,000. The new equipment falls into the MACRS 7-year class, so the applicable rates are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, 8.93%, and 4.46% in each successive year. Variable costs are estimated to be 70% of sales revenue, fixed costs excluding depreciation would are estimated at $2,500,000 per year, the state-plus-federal tax rate is 25%, and the corporation's cost of capital is 12%. 1. Calculate the initial capital outlay, operating cash flows, and terminal cash flow for this project. 2. Calculate and interpret the payback, discounted payback, net present value, internal rate of return, modified internal rate of return, and profitability index for this project. Should the project be accepted?