prepare a pro forma statement showing the annual cash flows resulting from the Lawn Robot project, and compute the NPV and IRR of the project. In addition to this base case, also consider the following two scenarios: (i) Sales forecasts are

10% worse (pessimistic) and (ii) sales forecasts are 10% better (optimistic). (Note that you need to compute cash flows as well as the NPV and IRR for each of these

0 1 2 3 4 5 6 7 8 9 10 Sales (units) 30,000 34,000 38,800 38,000 36,000 36,000 35,500 35,000 34,500 34,000 Adjusted Sales Price 1,000 1,000 1,000 950 950 950 950 900 900 900 Revenues 30,000,000 34,000,000 38,800,000 36, 100,000 34,200,000 34,200,000 33,725,000 31,500,000 31,050,000 30,600,000 Variable Cost 12,000,000 13,600,000 15,520,000 15,200,000 14,400,000 14,400,000 14,200,000 14,000,000 13,800,000 13,600,000 Fixed Costs 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 Rent ($10,000 per month) 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 EBIT 16,380,000 18,780,000 21,660,000 19,280,000 18, 180,000 18,180,000 17,905,000 15,880,000 15,630,000 15,380,000 MACRS Rates 0.143 0.245 0.175 0.125 0.089 0.089 0.089 0.045 Depreciation 2,858,000 4,898,000 3,498,000 2,498,000 1,786,000 1,786,000 1,786,000 890,000 Taxes 4,597,480 4,719,880 6,175,080 5,705,880 5,573,960 5,573,960 5,480,460 5,096,600 5,314,200 5,229,200 OCF 11,782,520 14,060,120 15,484,920 13,574,120 12,606,040 12,606,040 12,424,540 10,783,400 10,315,800 10,150,800 Net Working Capital (5% of Revenues) 900,000 1,500,000 1,700,000 1,940,000 1,805,000 1,710,000 1,710,000 1,686,250 1,575,000 1,552,500 1,530,000 Investment in WC (900,000) (600,000) (200,000) (240,000) 135,000 95,000 - 23,750 111,250 22,500 1,552,500 Capital Investment (20,000,000) 2,640,000 Total Cash Flow (20,900,000) 11, 182,520 13,860,120 15,244,920 13,709,120 12,701 040 12,606,040 12,448,290 10894,650 10,338,300 14,343,300