The Virginia Cane Company $($VCC$)$ is considering investing in a new cane manufacturing

machine that has an estimated life of $4$ years. The cost of the machine is $$60,000$ and the machine

will be depreciated straight$-$line over its $4-$year life to a salvage value of $$0.$ While the machine

will be fully depreciated over the project$$s life, management thinks the cane machine can be sold

for $$3,000,$ excluding applicable tax, at project end.

In the first year, VCC expects to sell $2,500$ canes. The number of canes sold each year is estimated

to grow by $10\%.$ VCC forecasts that the sale price of $$18$ per cane will remain unchanged over the

life of the project. The firm$$s total cost to make each cane, not including depreciation, is $$9$ per

cane, and this cost is expected to remain unchanged over the life of the project.

Installation of the machine and the resulting increase in sales will require increases in working

capital. ABC is budgeting that working capital needs each year will be $10\%$ of the next year$$s

revenues. The firm faces a marginal tax rate of $35\%$ and a discount rate of $11\%.$

$7.$ What is the project$$s total cash flow for year $0?$

$8.$ What is the amount that must be additionally invested in working capital at end of year $1?$

$9.$ What is the project$$s total cash flow for year $4?$

$10.$ What is the project$$s IRR?