Instructions: Carefully read the information below and answer questions which are highlighted in bold letters. Attempt all the questions. Company ABC is Manufacturer of Home Appliances and is considered among top five market capitalization firms of Pakistan. The company is considering to expand its business operations in another product line. In order to analyze the feasibility of this project the company needs the help of Investment analyst to evaluate this proposal. For this purpose the company has shared following information. This project requires an initial investment of Rs.1250000 in equipment and it will be depreciated to zero on Straight line basis over 5 years. This system will generate 80,000 units each year which will produce Revenue of Rs. 2400000 each year for next 5 years. However the variable cost charged to this project is estimated as Rs. 6 per unit and fixed cost is expected to be Rs. 50000 per year. The relevant Tax Rate is 39%.Q1.Calculate the Operating Cash Flows for this company? This project will require an additional Rs.35000 to invest in Networking Capital so that company can efficiently run its daily operations. You are also supposed to Q2.calculate projected cash flows for this company? After calculating these estimated cash flows.Q3. What do you think; should the company proceed for this new product if the required rate of return of this company is 17%?Being an investment analyst you are also supposed to Q4.calculate the profitability index and discounted payback period for this project. It will help the management to check how long it will take to recover their initial cost and to how much efficiently they are utilizing their resources to create wealth for the owners of company. Moreover the corporation has R&D department whose major responsibility is to continually work for development of product according to customer specifications. This department has issued a budgetary report for an existing product i.e. Manual Washing Machine which is going to be obsolete in coming years. The R& D experts have given an opinion that Company should stop producing this product and bring new product in market with latest features like Automatic machines as required by customers. Based on past experiences the company has estimated following figures for production of Manual Washing Machines for next few years. According to R&D manger this process requires initial cost of Rs. 500000, however for next 5 years it is expected to generate cash flows as follow 1 152000 2 234000 3 103456 4 97234 5 92543 From given information you have to Q5.Calculate the IRR for Company