Instructions: You must solve this problem. Do not round intermediate calculations. Final dollar answers should be rounded to two decimal places. Final interest rate answers should be rounded to4 decimal places as a percent. Show all your work. Do by hand. Don't do excel sheets Klaatu Co. Has recently completed a $400,000, two-year marketing study. Based on the results, Kaatu has estimated that 3,500 of its new RUR-class robots could be sold annually over the next five years to yield net incremental pre-tax revenues of $6,000 each. The company's financial director also believes that net pre-tax revenues of the company's current RTR-class robots will be reduced by $5,000,000 annually for each of the five years of the project.Assume that these cash flows occur at the end of each year. Start-up costs include $40 million to build production facilities, $2.4 million to acquire land, and fully tax-deductible expenses of $1.4 million (assume the tax deduction can be taken immediately).$8 million in net working capital. The $40 million facility is made up of a building valued at $5 million that will be depreciated using the 20-year depreciation schedule for which the rates of depreciation for first 5 years are: 3.750%, 7.219%, 6.677%, 6.177%, and 5.713% (as found in IRS Publication 946) and $35 million of manufacturing equipment using the 7-year schedule found on the MACRS table (distributed in class). At the end of the project's life, the facilities (including the land) will be sold for an estimated $8.4 million, assuming the building's value will be $4 million.The value of the land is not expected to change. Net working capital requirements for the project are estimated as follows: Year O an immediate increase of $8,000,000; Year 1 - a further increase to $10,000,000; Years 2 - 7 - remaining at $10,000,000; Year 8-a return to pre-project levels. - An ongoing, profitable business, Klaatu pays taxes at a 40-percent rate. Klaatu uses NPV analysis at a 10-percent discount rate on projects such as this one. Should Klaatu produce the RUR-class robots? Show all your work. Instructions: You must solve this problem. Do not round intermediate calculations. Final dollar answers should be rounded to two decimal places. Final interest rate answers should be rounded to4 decimal places as a percent. Show all your work. Do by hand. Don't do excel sheets Klaatu Co. Has recently completed a $400,000, two-year marketing study. Based on the results, Kaatu has estimated that 3,500 of its new RUR-class robots could be sold annually over the next five years to yield net incremental pre-tax revenues of $6,000 each. The company's financial director also believes that net pre-tax revenues of the company's current RTR-class robots will be reduced by $5,000,000 annually for each of the five years of the project.Assume that these cash flows occur at the end of each year. Start-up costs include $40 million to build production facilities, $2.4 million to acquire land, and fully tax-deductible expenses of $1.4 million (assume the tax deduction can be taken immediately).$8 million in net working capital. The $40 million facility is made up of a building valued at $5 million that will be depreciated using the 20-year depreciation schedule for which the rates of depreciation for first 5 years are: 3.750%, 7.219%, 6.677%, 6.177%, and 5.713% (as found in IRS Publication 946) and $35 million of manufacturing equipment using the 7-year schedule found on the MACRS table (distributed in class). At the end of the project's life, the facilities (including the land) will be sold for an estimated $8.4 million, assuming the building's value will be $4 million.The value of the land is not expected to change. Net working capital requirements for the project are estimated as follows: Year O an immediate increase of $8,000,000; Year 1 - a further increase to $10,000,000; Years 2 - 7 - remaining at $10,000,000; Year 8-a return to pre-project levels. - An ongoing, profitable business, Klaatu pays taxes at a 40-percent rate. Klaatu uses NPV analysis at a 10-percent discount rate on projects such as this one. Should Klaatu produce the RUR-class robots? Show all your work