You are the manager of the new Westchester In$-$N$-$Out location, and you are considering adding

a $2^{nd}$ kitchen to keep up with LMU student demand. The location's annual revenue is currently

$$10,000,000,$ and this expansion will add an additional $8\%$ in annual revenue. The associated

annual costs for running the new kitchen are $$100,000.$ The new kitchen will cost $$3,000,000$ to

build, it will operate for five years, after which time it will be worthless, and it will be depreciated

using the MACRs $5-$year rates. Additionally, you must purchase $$1,000,000$ in food service

machines, which have the same estimated five$-$year life with no salvage value. However, the

kitchen equipment is depreciated using MACRs $3-$year rates. In$-$N$-$Out is subject to a $20\%$ tax rate

and this project has a cost of capital of $7\%.$

a$.$ What are the periodic cash flows associated with the project? Please make a chart including Years, Purchases, Revenue, Costs, Depreciation, Tax, Opportunity Cost, Salvage, etc please

b$.$ Based on the NPV rule, should you commence with the building plan?

c$.$ Based on the IRR rule, should you commence with the building plan?

d$.$ If management determines the project is viable only if it has a discounted payback of

less than or equal to six years, should you commence with the building plan?

e$.$ What is the expansion's profitability index?