Traid Winds Corporation, a firm in the 33 percent marginal tax bracket with a required rate of return or discount rate of 10 percent, is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years and then, because this is somewhat of a fadproduct, it will be terminated. Given the followinginformation,determine the free cash flows associated with theproject, the project's net present value, the profitabilityindex, and the internal rate of return. Apply the appropriate decision criteria.

a.Determine the free cash flows associated with the project.

The FCF in year 0 is $(?). (Round to the nearestdollar.)

The FCF in year 1 is $(?). (Round to the nearestdollar.)

The FCF in year 2 is $(?). (Round to the nearestdollar.)

The FCF in year 3 is $(?). (Round to the nearestdollar.)

The FCF in year 4 is $(?). (Round to the nearestdollar.)

The FCF in year 5 is $(?). (Round to the nearestdollar.)

b.The net present value (NPV) of the project is $(?).(Round to the nearest dollar.)

c.The profitability index (PI) of the project is (?).(Round to three decimal places.)

d.The internal rate of return (IRR) of the project is (?)%.(Round to two decimal places.)

e.Should Traid accept this new project?(Select the best choice below.)

A. Yes. The project should be accepted because its NPV is positive, the PI is greater than one, and the IRR is greater than the required rate of return, 10%.

B. Yes. The project should be accepted because its NPV is positive,the PI is less than one, and the IRR is less than the required rate of return, 10%.

C. No. The project should be rejected because its NPV is negative, the PI is less than one, and the IRR is less than the required rate of return, 10%.

D. More information is needed to make this decision.

Data Table Cost of new plant and equipment: Shipping and installation costs: Unit sales $14,800,000 $170,000 Year 1 2 3 4 5 Units Sold 75,000 130,000 130,000 85,000 75,000 Sales price per unit: Variable cost per unit: Annual fixed costs: Working-capital requirements: $340/unit in years 1 through 4, $290/unit in year 5 $100/unit $750,000 There will be an initial working capital requirement of $210,000 to get production started. For each year, the total investment in net working capital will be equal to 9 percent of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5. Use the simplified straight-line method over 5 years. It is assumed that the plant and equipment will have no salvage value after 5 years. The depreciation method: Print Done Data Table Cost of new plant and equipment: Shipping and installation costs: Unit sales $14,800,000 $170,000 Year 1 2 3 4 5 Units Sold 75,000 130,000 130,000 85,000 75,000 Sales price per unit: Variable cost per unit: Annual fixed costs: Working-capital requirements: $340/unit in years 1 through 4, $290/unit in year 5 $100/unit $750,000 There will be an initial working capital requirement of $210,000 to get production started. For each year, the total investment in net working capital will be equal to 9 percent of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4. Finally, all working capital is liquidated at the termination of the project at the end of year 5. Use the simplified straight-line method over 5 years. It is assumed that the plant and equipment will have no salvage value after 5 years. The depreciation method: Print Done