Details	Yrs. 1	2	3	4	5	6	7	8
Sales (units)	3000	5000	6000	6500	6000	5000	4000	3000
Fixed Costs	25000	25000	25000	25000	25000	25000	25000	25000
Annual Depreciation	114320	195920	139920	99920	71440	71440	71440	35600

1. Project X is being appraised and has the following details:

The following information is also available:

1. Unit selling price is expected to be $120 for the first 3 years then fall to $110 thereafter.

2. Unit variable costs will remain constant at $60/unit throughout the project life

3. The project required initial outlay of $800 000

4. The firms marginal tax rate is 34% and the required rate of return is 15%

Required:

1. Calculate the projects operating cash flows. (12 marks)

2. What is the projects NPV. (5 marks)

3. Is the project acceptable or not why? (3 marks)

What are the factors that influence a firms dividend policy (5 marks)