Rogers Restaurants is looking at a project with the following forecasted sales: First-year sales quantity of 31,000 with an annual growth rate of 3.5% over the next ten years. The sales price per unit is $42.00 and will grow at 2.25% per year. The production costs are expected to be 55% of the current years sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $2,400,000. It will be depreciated using MACRS and has a seven-year MACRS life classification. Fixed costs are $335,000 per year. Rogers Restaurants has a tax rate of 30%.

What is the operating cash flow for this project over these ten years?

Based on the 10-year projected OCFs, if the manufacturing equipment can be sold for $80,000 at the end of the five-year project and the cost of capital is 12%. Explain whether it is worth for Rogers to invest on this manufacturing equipment. Hint: Perform the estimation using Excel spreadsheet.