The objective of this case is for the students to apply their skills in capital budgeting and project analysis. Michelle Rodriguez of New Balance has reached out to you for assistance on her latest assignment memo analyzing the viability of two projects, Sneaker 2013 and Persistence. The memo should use single spacing, 12-point font, and one inch margins.

Address the following issues:

1.Produce a projected capital budgeting cash flow statement for the Sneaker 2013 project by answering the following:

a.What is the project's initial (year 0) investment outlay?

b.What are the project's annual (years 2013-2018) net operating cash flows?

c.What is the project's terminal (2018) non-operating net cash flow?

d.Does Sneaker 2013 appear viable from a quantitative standpoint? To answer this question, estimate the project'spayback, net present value,andinternal rate of return.

2.Produce a projected capital budgeting cash flow statement for the Persistence project by answering the following:

a.What is the project's initial (year 0) investment outlay?

b.What are the project's annual (years 2013-2018) net operating cash flows?

c.What is the project's terminal (2018) non-operating net cash flow?

d.Does Sneaker 2013 appear viable from a quantitative standpoint? To answer this question, estimate the project'spayback, net present value,andinternal rate of return.

3.Which project do you think is more risky? How do you think you should incorporate differences in risk into your analysis?

4.Based on the calculated payback period, net present value, and internal rate of return for each project, which project looks better for New Balance shareholders? Why?

5.What is your final recommendation to Rodriguez?

Please answer the 5 questions!