please compute project cash flows for years 2012-2017

also, NPV of the investment in USD

and IRR of investmnet in %

Hermosa Components: Revenue Growth, Sales Price, and Currency Risk Scenario. Hermosa Beach Components, Inc, of California exports 23,000 sets of low-density light bulbs per year to Argentina under an import license that expires in five years. In Argentina, the bulbs are sold for the Argentine peso equivalent of $60 per set Direct manufacturing costs in the United States and shipping together arnount to $40 per set The market for this type of bulb in Argentina is stable, neither growing nor shrinking, and Hermosa holds the major porton of the market The Argentine government has invited Hermosa to open a manufacturing plant so imported bulbs can be teplaced by local production. If Hermosa makes the investment, it wil operate the plant for five years and then sell the bulding and equipment to Argentine investors at net book value at the time of sale plus the value of any net working capital (Net working capital is the amount of current assets less any portion financed by local debt.) Hermosa will be allowed to repatriate all net income and depreciation funds to the United States each yoar. Hermosa trad tionally evaluates all foreign investments in US dolliar torms. - Investment. Hermosa's anticipated cash outlay in US dollars in 2012 would be as follows: Ali investment outays will be made in 2012 , and all operating cash flows will occur at the end of years 2013 through 2017 - Depreciation and Investment Recovery. Building and equipment will be depreciated over five years on a straght-line basis At the end of the fifth year, the $1,300,000 of net working capital may also be repatriated to the Unted States, as may the remaining net book value of the plant. - Sales Price of Bulbs. Locally manufactured bulbs will be sold for the Argentine peso equivalent of $60 per set. - Operating Expenses per Set of Bulbs. Material purchases are as follows - Transfer Prices. The $10 transfer price per set for raw material sold by the parent consists of $5 of direct and indirect costs incurred in the United States on their manulacture, creating $5 of pre-tax profit to Hermosa Beach - Taxes. The corporate income tax rate is 28% in both Argentina and the United States (combined federal and state/province). There are no capital gains taxes on the future sale of the Argentine subsidiary, either in Argentina or the United States. - Discount Rate. Hermosa Components uses a discount rate of 15% to evaluate all domestic and foreign projects Hermosa wishes to explore the implications of being able to grow sales volume by 4% per year. Argentine inflation is oxpected to average 5% per year, so sales price and material cost increases of 7% and 6% per year, respectively, are thought reasonable. Although material costs in Argentina are expected to rise, U.S -based costs are not expected to change over the five-year period in eddifion to the assumptions employed above, Hermosa now wishes to evaluate the prospect of being able to sell the Argentine subsidiary at the end of year 5 at a multiple of the business's earnings in that year. Hermosa believes that a multiple of 6 is a conservative estimate of the market value of the firm at that time. \begin{tabular}{lr} \hline Building and equipment & $1,000,000 \\ Net working capital & 1,300,000 \\ \cline { 2 - 2 } Total investment & $2,300,000 \\ \hline \end{tabular} (Click on the following icon in order to copy its contents into a spreadsheet.)