Rocky Mountain Oil and Gas Corp is considering building a pipeline from a remote source of natural gas with only a $6$ year supply of reserves. The pipeline will cost $$1,000,000,$ plus installation costs of $$100,000$; accompanying buildings will cost another $$190,000.$

Both the pipeline and the buildings qualify for a CCA $($depreciation$)$ rate of $20\%.$ Important: The half$-$year rule applies. $($only half of the full$-$year depreciation is taken in the first year$).$

Rocky Mountain Oil and Gas expects that revenue from the pipeline in the first year will be $$675,000$ which will grow at rate of $6\%$ per year for the $6-$year life of the project. Variable costs each year are estimated to be $45\%$ of revenue and fixed costs are estimated to be $$120,000$ per year. In $6$ years, the buildings and pipeline will be able to be sold for $$380,436\mathrm{.}48($after environmental cleanup costs$).$

Rocky Mountain Oil and Gas has a tax rate of $32\%,$ and its cost of capital is $12\mathrm{.}5\%.$ They have hired you as a consultant to determine whether or not Rocky Mountain Oil and Gas should build the pipeline? Please see attached spreadsheet to answer the questions. $1)$ What is the depreciation for the first year? $2)$ What is the after$-$tax cash flow for the second year $($Year $2)?3)$What is the NPV of the Pipeline project? $4)$Should Rocky Mountain Oil and Gas take the project $?($Yes$/$No$)5)$Rocky Mountain Oil and Gas estimates that if they increase fixed costs to $$121,500($an extra $$1500$ a year on marketing$),$ they will be able to raise the annual growth rate in sales to $8\mathrm{.}75\%$ What would the NPV be if the company did this? $6)$Should the company increase fixed costs to $$121,500$ in order to raise the annual growth rate in sales to $8\mathrm{.}75\%?$