PART II- Capital Budgeting Case (18 points) Instructions: You must sobre this problem. Do nos rend intermediate sakulations Final dollar answers should be rounded to two decimal places. Final interest rate answers should be rounded to 4 decimal places as a percent. Show all your work Klaatu Co. Has recently completed a $400,000, two-year marketing study Based on the results, Kastu 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 56,000 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 540 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) S8 million in net working capital. The 540 million facility is made up of a building valued at $ million that will be depreciated using the 20-year depreciation schedule for which the rates of depreciation for first 5 years are: 3.750%, 7219%, 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 54 million The value of the land is not expected to change. Net working capital requirements for the project are estimated as follows: Year 0 - an immediate increase of 8,000,000 Year 1 -a further increase 10 $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