Kite Company. is considering making and selling custom kites in two sizes. The small kites would be priced at $13.00 and the large kites would be $26.00. The variable cost per unit is $6.25 and $13.50, respectively. Jill, the owner, feels that she can sell 3,800 of the small kites and 2,060 of the large kites each year. The fixed costs would be $2,120 a year in addition to the variable costs and the depreciation expense is $20,000. The tax rate is 35 percent.

Question 1: What is the annual operating cash flow for each year that the project is in operation?

Suppose that this project could last 4 years with an initial purchase of a $80,000 kite making machine. It would also require a Net Working Capital of 5% of the total sales for the duration of the project.

Question 2 : Calculate the CFFA for years 0 to 4.

For each year make sure to include OCF, changes in MWC, NCS, and CFFA for year 0 to year 4.