Grand Yachts Club (GYC) is considering a proposal to acquire a new yacht in order to lease it in the next 3 years. The current price of the yacht is $1.5 million, which can be depreciated for tax purposes to a zero salvage value by the straight-line method over the next 10 years. However, the manager of GYC is confident that the yacht will be worth $1.2 million after 3 years. The yacht also requires an initial investment in working capital of $120,000, which will be recovered in full at the end of year 3. The EBIT is expected to be $850,000 in the first year and to grow by 10% every year. Profits are subject to tax at a rate of 34%, and the cost of capital is 14%. a. Identify the relevant cash flows for this project. (10 points) 850000 after 938000 tanes 102 S61000 61700 7 b. Should GCH take the project? ( 2 points)