You have been hired by a firm that studies investment opportunities in the real sector. The first task that you have been assigned is to evaluate the financial suitability of the following investment project that has a duration of 5 years:

Initial investment 600 million in the purchase of machinery and equipment, which are depreciated in a straight line over 5 years without salvage value. 1,100 million for investment in inventory. It will always be necessary to maintain this level of inventory, except at the end of the project when it is liquidated.

Income and expenses Sales in the first year of operation of 5,000 units, each at a value of $ 220,000. It is estimated that the quantities sold will have an annual growth of 12%. The sale price will grow with inflation. Unit production costs of $ 99,000. these costs will grow at the same rate as inflation. Fixed operating expenses of $ 200 million. Likewise, variable advertising expenses of 2% of total sales Income tax of 35%

To carry out this task, the following working capital policies have been confirmed: -Accounts receivable will have a rotation of 90 days. -Accounts payable will have a 30-day rotation.

Your boss has asked you: a) Construct the evolution of the working capital of the working capital. b) Estimate the project's free cash flow. Show your estimates in detail. c) Give a concept about the financial goodness of the project and if it is convenient for the signature. Consider that the project will be financed 50% with a bank loan agreed at an interest rate of 12% EA before taxes. Use as a reference sector for a beta of Chemical (diversified).