Example Co is considering investing in a wind facility. Please create income statements, balance sheets, and cash flow statements for 5 years for this proposed investment considering the following assumptions:

Prior to the investment, the projects beginning cash balance is $7 million and there are no other assets, no debt and 230,000 shares of common stock are outstanding.

The cost per installed turbine is $5 million and Example plans to install 10 turbines.

Example plans to finance this investment with 50% debt, 40% equity, and 10% cash. The terms of the debt include no principal repayments until the end of year 25 and a 6% interest rate. The current share price of Example stock is $35. Assume no dividend payments during the first 5 years.

The life of the facility is 25 years. Assume book and tax depreciation are the same.

There are no required ongoing capital expenditures.

The facility will produce 87,600 mega watt hours (MWh) of electricity per year and the initial sales price is $40 per MWh of electricity sold. The price of electricity is expected to escalate at 2% per year. Assume full year production in year 1 and each year thereafter.

The facility will employ 2 employees earning $40,000 per year. There is a 65% overhead on their labor. It is expected that labor expense will increase by 3% per year.

The income tax rate is 40%. Assume there are no other taxes (e.g., sales and property taxes).

Based on your results, what is your recommendation regarding this investment?