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Question 2 5 pts Aero Motorcycles is considering opening a new manufacturing facility in Fort Worth to meet the demand for a new line of

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Question 2 5 pts Aero Motorcycles is considering opening a new manufacturing facility in Fort Worth to meet the demand for a new line of solar charged motorcycles (who wants to ride on a cloudy day anyway?) The proposed project has the following features: The firm just spent $300,000 for a marketing study to determine consumer demand (@t-o). Aero Motorcycles purchased the land the factory will be built on 5 years ago for $2,000,000 and owns it outright (that is, it does not have a mortgage). The land has a current market value of $2,600,000 . The project has an initial cost of $20,000,000 (excluding land, hint: the land is not subject to depreciation), If the project is undertaken at to the company will need to increase its inventories by $3,500,000, accounts receivable by $1,500,000, and its accounts payable by $2,000,000. This net operating working capital will be recovered at the end of the project's life (t - 10) If the project is undertaken, the company will realize an additional $8,000,000 in sales over each of the next ten years. (lue sales in each year are $8,000,000) The company's operating cost (not including depreciation) will equal 50% of sales. . The company's tax rate is 35 percent. Use a 10-year straight-line depreciation schedule. . Att - 10, the project is expected to cease being economically viable and the factory (including land) will be sold for $4,500,000 (assume land has a book value equal to the original purchase price). . The project's WACC - 10 percent Assume the form is profitable and able to use any tax credits i.e. negative taxes). What is the operating cash flow @t-2? Round to nearest whole dollar value

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