Martin Enterprises needs someone to supply it with $129,000$ cartons of machine screws

per year to support its manufacturing needs over the next five years, and you've decided to bid

on the contract. It will cost you $$930,000$ to install the equipment necessary to start

production; you'll depreciate this cost straight$-$line to zero salvage value over the project's life.

You estimate that, in five years, this equipment could be worth $$97,000($before taxes$).$ Your

fixed production costs will be $$505,000$ per year, and your variable production costs should be

$$17\mathrm{.}75$ per carton. You also need an initial investment in net working capital of $$98,000.$

Assume your tax rate is $24$ percent and you require a return $($discounting rate$)$ of $10$ percent on

your investment.

Assuming that the price per carton is $$26\mathrm{.}80,$ prepare a pro forma income statement.

What is the operating cash flow $($OCF$)?$

Find out the total projected CF$.$

What is the NPV of the project?

What is the IRR of the project?

Do you want to take the project or not?