You have been hired by Nike Inc (NKE) to assess the viability of a new line athleisure wear. The expected sales and costs for this project are listed below. The initial investment is depreciated using a 3-year MACRS schedule. There is a requirement for net working capital to get the project started and an expected salvage value at the end of its life. Calculate the projected cash flows. Then determine if Nike Inc. will accept or reject this project. Year 1 200,000 Year 2 260,000 Year 3 295,000 Year 4 340,000 Unit sales 75.00 Price (per unit) Variable cost (per unit) Fixed costs (per year) $ $ $ 48.20 1,000,000 Initial investment Salvage value Initial NWC $ 12,900,000 $ 1,500,000 $ 3,500,000 Tax rate 28% 16% Required return Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 33.33% 44.45% 14.81% 7.41% MACRS Schedule 3-year 5-year 7-year 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46% 4.46% Question 1 - Complete the pro forma income statement for the life of the project and calculate the Operating Cash Flow for each year. (10 points) Year Year 1 Year 2 Year 3 Year 4 Revenues Variable costs Fixed costs Depreciation EBIT Taxes (28%) Net income OCF