I asked them to conduct a cash flow analysis to make sure that the proposed t-shirt venture generate value. The students, after careful data collection and analysis, have come up with the following assumptions for T-shirt Corp.:

Assumptions:

1. The life of the project is expected to be 5 years. Please assume that the analysis is taking place at the end of 2018. 2019 will be the first year of operation.
2. The projected sales are:

	2019	2020	2021	2022	2013
Number of t-shirts	500	1,000	1,000	1,500	2,000

3. The price of a t-shirt will be $25 in 2019 and will increase by 3% per year in the following years.
4. The cost of procuring one t-shirt will be $4 in 2019 and will increase by 2% per year afterwards.
5. The cost of printing a design will be $2 per t-shirt.
6. There will be marketing expenses amounting to $1,000 per year.
7. T-shirt Corp. needs to invest in a machine that would print designs on the t-shirts. The machine costs $3,000 and will be depreciated fully using a straight line method over 5 years. At the end of 2021, the machine will be recycled at no cost.
8. The company will run the operations in a garage owned by one of the parents. The rent and utilities allocated to the garage is $200 per month. This amount would be paid regardless of how the garage is utilized.
9. The company will finance the machine with a bank loan. Interest expenses will be $300 per year.
10. In order to run the t-shirt venture, the T-shirt Corp. will need to invest 10% of the following years sales in inventory. The venture will also need to have 15% of following years sales in accounts payable and 20% of following years sales in accounts receivable.
11. T-shirt Corp. already spent $5,000 for market research in 2018.
12. Tax rate (federal plus state) is 30%.
13. The cost of capital for this project is estimated to be 10%.

Please analyze this project and provide advice to T-shirt Corp. Should they start the t-shirt venture?