VC Company LLC is hiring you to make a financial model to analyze the feasibility of a project to build a new distribution center, in order to sell a new line business of a products. The assumptions are:

1. The projects's initial investment is $996,000 and is intended to last 10 years of operations.

2. The distribution center will be depreciated with the straight-line method and will be sold at the end of the tenth year in $200,000 (taxes on the sale of assets will apply).

3. Tax rate for company is 34%.

4. The project is financed by investors who ask for a 16% yield on their investment.

5. Sales in the distribution center will have the following assumptions:

a. Price per unit $106.

b. Se table.

6. The cost structure is comprised of variable components :

a. Direct material cost per unit: $8.

b. Labor cost per unit: $10.

c. Indirect cost per unit: $12

7. Yearly expenses are fixed:

a. Lease payments: $5800

b. Administrative expenses: $4,500

c. General payroll: $5,200

8. Net Working Capital needs will represent 16% of sales. For year 0 NWK requirement is $17,000 (Hint, CF from WK in year 0 will be -$17000, for following years change in WK will represent CF).

Model should include projected income and cash flows (operating, WK, investment, total).

Please calculate Profitability Index with two decimals.

YEAR	Units per Year
1	2000
2	3000
3	4000
4	5000
5	6000
6	7000
7	8000
8	7000
9	6000
10	5000