You are analyzing an investment opportunity to upgrade your factory. Your planning horizon is over $5-$years. It has the following components:

$1.$ The investment:

a$.$ Project will cost $$13$ million of investment. Of this only $$9$ million can be depreciated straight line over $3$ years leaving the remainder value as book value.

b$.$ You are confident that after $5$ years you could sell the equipment for $$4\mathrm{.}5$ million

c$.$ To get started you will also need $$350,000$ of initial working capital

$2.$ The improvement

a$.$ As a result of the project$($and after doing all the cost and revenue analysis$)$ you determine that your EBIT will be $$4\mathrm{.}1$ million in $1$ year because of the project and grow by $3\mathrm{.}5\%$ each year.

b$.$ The company expects you to keep costs in check and sales and prices to improve slightly so that you can simply work with the expected changes in EBIT over the $5-$year planning horizon. No need to make any adjustments to sales and expenses. As they are all embedded in the EBIT calculation

$3.$ Company Data

a$.$ The company$$s tax rate is $18\%$

b$.$ The company$$s discount rate is $11\%$

What are the total $($considering initial capital requirements, operating cash flows and terminal cash flows$)$ undiscounted Free Cash Flows for each period:

Period $0\_\_\_\_\_$

Period $1\_\_\_\_\_$

Period $2\_\_\_\_\_$

Period $3\_\_\_\_$

Period $4\_\_\_\_\_$

Period $5\_\_\_\_\_\_$

Whats the projects NPV $?$ Whats the Projects IRR? IS this an attractive project? Why or Why not?