Miglietti Restaurants is looking at a project with the following forecasted sales: first-year sales quantity of 33,000, with an annual growth rate of

4.00% over the next ten years. The sales price per unit will start at $40.00 and will grow at 2.00% per year. The production costs are expected to be

55% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of

$2,100,000. It will be depreciated using MACRS, and has a seven-year MACRS life classification. Fixed costs will be $350,000

per year. Miglietti Restaurants has a tax rate of 38%. What is the operating cash flow for this project over these ten years? Find the NPV of the project for Miglietti Restaurants if the manufacturing equipment can be sold for $160,000 at the end of the ten-year project and the cost of capital for this project is 7%.

Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 5 11.52% 8.93% 9.22% 6 5.76% 8.93% 7.37% 7 8.93% 6.55% 8 4.45% 6.55% 9 6.55% 10 6.55% 11 3.28%

a) What is the operating cash flow for this project in year 1? year 2? year 3? year 4? year 5? year 6? year 7? year 8? year 9? year 10?

b) What is the after tax cash flow of the project of disposal?

c) What is the NPV of the project?