FIN 301 net income statement 2 5 21 (Compatibility Mode] - Word aut References Mailings Review View ont A A Aa E-E Tell me what you want to do... AaBbCcDc AnBbCcDe AaBbC AaBbCc AaBbC ABBCCD. AaBbC 1 Normal No Spac... Heading 1 Heading 2 Title Subtitle Subtle E Paragraph Styles Net Income & Operating Cash Flow 2/9/21 Quiz Question #1 IBM is considering a new expansion project and the finance staff has received information summarized below. . . . . . The project require IBM to purchase $900,000 of equipment in 2013 (1-0). Inventory will increase by $175,000 and accounts payable will rise by $75,000 The project will last for four years. The company forecasts that they will sell 2,000,000 units in 2014, 2,500,000 units in 2015, 2,500,000 units in 2016, and 2,400,000 units in 2017. Each unit will sell for $2.5 in 2014, $2.5 in 2015, $1.5 in 2016 and 52 in 2017. The fixed cost of producing the product is $1 million each year. The variable cost of producing each unit will rise from $1.05, $1.03, $1.4 and $1.05 from 2014 to 2017 respectively. The equipment will be depreciated under the MACRS system using the applicable rates of 33%, 45 %, 15%, and 7% respectively When the project is completed in 2017 (4), the company expects that it will be able to salvage the equipment for t $100,000, and it expects that it will fully recover the NWC. The estimated tax rate is 40%. Based on the perceived risk, the project's WACC is estimated to be 10% Your main task is to and evaluate the cash flows, analyze the results, and present your recommendations. To help in the analysis, answer all the following questions: 1. What is the total equipment cost at the start? Total equipment cost-Cost of equipment Installation 222222 IT ly