Tim Cook has hired you to analyze whether Apple should invest in an electric vehicle, the

$$Icar$.$ The proposed project is estimated to sell $50000,100000,150000,200000,$ and

$300000$ cars during years $1$ to $5.$

Apple analysts have estimated that the Icar can be sold for $$50000$ per unit. The variable

costs are estimated at $$30000$ per unit. The fixed costs are estimated at $$900$ million per

year. The initial investment required for this project is $$17$ billion, which can be depreciated

in a straight line over five years.

Apple analysts have also made long$-$term forecasts, estimating that starting from year $6,$

the project cash flow can be assumed to grow indefinitely at a rate of $1\%$ per year.

Apple's capital structure is $36\%$ Equity and $64\%$ Debt. Additionally, Apple$$s corporate tax

rate is $21\%.$

The market risk premium is $7\%,$ and the risk$-$free rate is $4\mathrm{.}2\%$

$6)$ Obtain the pro forma financial statements for years $1$ to $5.$ Hint: the pro forma

financial statements should include Sales, variable costs, fixed costs, depreciation,

EBIT, taxes, and Net income. $(10$ points$)$

$7)$ Obtain the project$$s cash flow for years $1$ to $5.$ Note that we don$$t have changes in

net working capital, and there is no sale of the initial investment, so the operating

cash flows are the same as the project cash flows $(5$ points$)$