1. In Excel, prepare the Income Statement followed by the Cash Flow Statement to determine the project's after-tax cash flows in actual dollars.
2. Determine the cash flows in constant dollars.
3. Determine the Inflation-free (real) IRR' on the investment.
4. Do you think Jim Cousteau will recommend this project? Why?

After reviewing specifications and quotations for a new Printing Press, Jim Cousteau, Project Engineer at New Britain Printing LLC (NEP) has natrowed if down to one, Ag Converting Equipment inc. for $2,650,000. John Smith. CEO of NEP, is now asking him to evalvate the irvestment and make recomrnendatiors. Jim estimates that the site preparation and instailation would cost $350,000 in addition to $65,000.00, which would cover the expenses of AEC engineers who wil assiat in the installation and training of the workforce. Lucklly it has been determined that it can be instailed in the exdating tacilty, No building investment would be required. Pefer Thompson, the Printing Manager, asked Jim to include the required tooling for $265,000, To start production NBP Will need to putchase an addicianal $315,000 in riw materials inventory to cover customer commitments in the first couple of months: Peter told Jim that being a new type of equipment, the first year of operation would be one of learning and experinenting; consequentily, production'sales would not be up to the desired level, and more material would be wasted until its operators achieve a level of etliciency, reflecied in the table beiow: raw materials prices will increase at a rate of 4.5% and 0MM and energy at a.5\%. Their union contract has set the labor increases at 2.9s. The remaininit will be self.financed iy Nnit. They (The Directont have ant a martet rate of return of at leas 200 for the first five years of the project's life. three years. The tooling will be stid as scrap metal for 322.500 itodinjr dolari) the compory margnal tak isie is asth The evoected miniage inflation rate is copected to be a. 3 S