HOWS TO sidering setting up a software development business. To set up the enterprise, you anticipate that you will need to acquire computer hardware costing $100,000. (The lifetime of this hardware is five years for depreciation purposes, and straight-line depreci- or- rate 5 to ears. Fica- the xer- ation will be used.) In addition, you will have to rent that an office for $50,000 a year. You estimate that you You will need to hire five software specialists at $50,000 vate a year to work on the software and that your mar- nter. keting and selling costs will be $100,000 a year. You Ost is expect to price the software you produce at $100 per - you unit and to sell 6,000 units in the first year. The aying actual cost of materials used to produce each unit is you $20. The number of units sold is expected to increase 10% a year for the remaining four years, and ose to the revenues and costs are expected to increase at 3% vest a year, reflecting inflation. The actual cost of materi- ect to als used to produce each unit is $20, and ollow need to maintain working capital at 10% of revenues. (Assume that the working capital investment is made at the beginning of each year.) Your tax rate will be 40%, and the cost of capital is 12%. ject. a. Estimate the after-tax operating income on this on this project. b. Estimate the cash flows each year on this project. c. Estimate the time-weighted cash flows on this collect project. f you you will h year Tt your