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RET Inc. has decided to manufacture and sell a new line of high-priced commercial stoves. Projected sales for the new line of stoves in annual

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RET Inc. has decided to manufacture and sell a new line of high-priced commercial stoves. Projected sales for the new line of stoves in annual units for the next 10 years are 10,000 a year. The sales price is $3,000 per stove, the variable costs are $2,250 per stove, and fixed costs are $4,000,000 annually. The plant and equipment required for producing the new line of stoves costs $10,000,000 (today) and will be depreciated down to zero over 10 years using straight-line depreciation. The plant and equipment is sold for $6,000,000 at the end of 10 years. Net working capital increases by $2,000,000 at the beginning of the project (year 0 ) and it is reduced back to its original level in the final year. The tax rate is 30 percent and the discounting rate for the project is 10%. 1. What is the incremental cash flow of the project at year 0 ? A 2. What is the annual Net Income (NI) for the project in year 1 ? (do not enter \$ sign) A 3. What is the annual operating cash flow (OCF) for the project in year 1 ? (do not enter $ sign) A 4. What is the book value for the plant at equipment at the end of year 10 ? (do not enter \$ sign) A 5. What is the after-tax cash flow of the plant and equipment at disposal (salvage)? (do not enter \$ sign) A 6. What is the incremental cash flow at the end of year 10 ? (do not enter $ sign) 1. What is the incremental cash flow of the project at year 0 ? A 2. What is the annual Net Income (NI) for the project in year 1? (do not enter \$ sign) A 3. What is the annual operating cash flow (OCF) for the project in year 1 ? (do not enter $ sign) A 4. What is the book value for the plant at equipment at the end of year 10 ? (do not enter $ sign) A 5. What is the after-tax cash flow of the plant and equipment at disposal (salvage)? (do not enter $ sign) A 6. What is the incremental cash flow at the end of year 10 ? (do not enter \$ sign) A 7. What is the Net Present Value (NPV) for this project? * Please round to nearest thousand in order to accommodate for rounding errors. Example: if you obtain $1,245,678 then enter 1,246 (do not enter $ sign) A 8. The project should be rejected or accepted? In your response only type either accepted or rejected A)

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