The capital budgeting analysis was completed by a company Chief Financial Officer (CFO) for the following project. Answer the questions below. Yr. 0 Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Cumulative Income Statement: Sales 550,000 516,670 350,000 300,000 250,000 Cost of Goods Sold (165,000) (155,001) (105,000) (90,000) (75,000) Gross Profit 385,000 361,669 245,000 210,000 175,000 Fixed Expenses (excluded Depreciation) (165,000) (155,001) (105,000) (90,000) (75,000) Depreciation (100,000) (100,000) (100,000) (100,000) (100,000) Earnings Before Interest and Taxes (EBIT) 120,000 106,668 40,000 20,000 286,668 Taxes 30,000) 26,668) 10,000) (5,000) Net Income 90,000 80,000 30,000 15,000 215,000 Cash Flows: EBIT 120,000 106,668 40,000 20,000 Add Depreciation 100,000 100,000 100,000 100,000 100,000 Subtract Taxes (30,000) (26,668) (10,000) (5,000) Operating Cash Flows 190,000 180,000 130,000 115,000 100,000 Assets Purchases: Proposed Investment in Equipment (500,000) Investment in Inventories (20,000) 20,000 Residual Value of Equipment after Tax 50,000 Total Cash Flows (520,000) 190,000 180,000 130,000 115,000 170,000 Discount Factor at 10% 0.909 0.826 0.751 0.683 0.621 Present Values (520,000) 172,710 148,680 97,630 78,545 105,570 Questions - Calculate or answer the following: 1. Accounting average return? 2. Payback period? 3. Net present value? 4. Is the project internal rate of return of 16.5% considered good or bad, why? 5. The profitability index for the project? 6. The return on sales for each year (ROS). Calculate the average return on sales for the five years. The ROS statistic is used for which type of responsibility centre? 7. The company set goals for the accounting average return of 20%, payback period of 5 years, return on sales of 10% and required investment return of 10%. Would you accept or reject the project and why