It is important to consider cash flows in order to assess new business opportunities and potential capital investments.

For this assignment, consider the following financial projections of BlueVal and complete the required calculations and tasks.

Using the above financial information, complete the following:

• Determine the incremental cash flows for each year.
• Explain your calculations.

(Use the information attached for calculations)

Project Cash Flows and Risk Blue Val is evaluating whether it should bid on developing a new interactive digital solution in a regional teaching hospital located in New York. This new solution will require an initial outlay of $1,000,000 to hire additional media designers. According to Jason Viola, CEO, this new solution will put BlueVal on the map as the premier hospital social and digital media consultants. The future revenue stream from this project alone would boost the company's profits significantly. During the past few weeks, Lisa talked at length with the company's designers regarding the costs of producing this new design solution. She then compiled her conversations with the experts and additional information she researched from independent sources and put together a rather detailed forecast of the solution's outlay and future income streams. The final report, which includes only the forecasted cash flows and explanations for the forecast, was submitted to Jason Viola and Angelo Rico. The report does not include the net present value analysis of the new solution because another department conducts this analysis. A few days ago, the investment officer called Lisa to tell her that he thought that the cash flow forecasts she submitted were incorrect. Lisa explained that her forecasts were based on a significant amount of data that she gathered and verified with independent sources. She told the investment officer that her estimations were based on confident growth rates in revenue streams in the subsequent ten years. The investment officer said that he thought the growth figure could be higher and asked Lisa to provide cash flows using different estimation figures. It is clear from this example that the most difficult step in the analysis of a new project is estimating its cash flows. This data includes the investment outlays needed to develop the project solutions and the net cash flows the project is expected to generate after it is completed. Many variables are involved in cash flow estimation and many individuals in BlueVal have participated in this ritual of gathering and assessing relevant information. Given that it is inherently difficult to estimate the costs and revenues connected with large complex projects, forecasting errors can be very significant. As such, the financial staff's role of forecasting cash flows is critical and includes the following steps: 1) Coordinating the efforts of the other departments such as design management and marketing. 2) Ensuring that everyone involved with the forecast uses a consistent set of economic indicators. 3) Ensuring that no biases are inherent to the forecasts, given that managers have pet projects that they push toward implementation. Embedded in many decision rules are two of the most significant factors: Project implementation decisions must be based on cash flows after taxes, not accounting income. Only incremental cash flows, i.e. cash flows that change if the project is implemented, are relevant to accepting or rejecting a decision.It is important to consider cash flows in order to assess new business opportunities and potential capital investments. For this assignment, consider the following financial projections of BlueVal and complete the required calculations and tasks. Accounting Profits Year 2011 Year 2015 Sales 50,000 50,000 Costs except depreciation (25,000) (25,000) Depreciation (15,000) (5,000) Net operating income or cash flow 10,000 20,000 Taxes based on operating income (30 percent) (3,000) (6,000) Net income 7,000 14,000 Using the above financial information, complete the following: Determine the incremental cash flows for each year. . Explain your calculations