Green Spokes is now considering bringing this product to the market but will require an additional production facility if it is to proceed with the new product launch. Construction cost of this facility will be 100,000. It is expected to have an operating life of five years, with no residual value. The company uses straight line depreciation. Operating and financial forecasts relating to this project are: Selling price Variable cost/unit 25 12 Annual fixed overhead (cash) 30,000 Project Year Sales volume (units) 1 2 3 5,000 5,200 5,400 5,800 5 4,500 In addition, the facility will be allocated a fixed (non-cash) corporate overhead of 12% of the initial cash outlay annually. Green Spokes' cost of capital is 18%. You are required to: i. Prepare annual profit forecasts for the project ii. Calculate the Net Present Value iii. Recommend whether Green Spokes should proceed with the project, giving your reasons Discount factor table n 0.01 0.02 0.04 0.05 0.06 0.07 0 1 2 0.980 0.961 0.925 3456 0.951 0.906 0.822 0.784 0.942 0.888 0.790 0.746 0.705 0.08 0.09 0.10 0.12 0.15 0.16 0.18 0.20 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 0.990 0.980 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.870 0.862 0.847 0.833 0.907 0.890 0.873. 0.857 0.842 0.826 0.797 0.756 0.743 0.718 0.694 0.971 0.942 0.889 0.864. 0.840 0.816 0.794 0.772 0.751 0.712 0.658 0.641 0.609 0.579 0.961 0.924 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.636 0.572 0.552 0.516 0.482 0.747 0.713 0.681 0.650 0.621 0.567 0.497 0.476 0.437 0.402 0.666 0.630 0.596 0.564 0.507 0.437 0.410 0.370 0.335 Fl en 10/1000 MWEK M** of