Quincy Semi-conductors (QS) wants to take advantage of the current shortage in industrial chips and set-up a foundry to manufacture them. The CEO of QS believes that the project will require an initial investment of $100 million and it will last 4 years. The equipment can be sold for $8 million after the project is over. The annual sales will be $60 million. The fixed production costs will be $4 million per year and the variable production costs should be 60% of sales. QS needs an initial investment in net working capital of $10 million, all of which will be recovered when the project ends. The effective tax rate is 21 percent. The weighted average cost of capital is 8%. Should QS go forward with this project? Why? Explain.

INSTRUCTIONS: Create a pro-forma financial statement showing all the steps necessary to calculate OCF, NCS, and NWC.