You have decided to buy a small farm and convert it such that your operation can achieve certification as organic and regenerative. This strategy requires a substantial up-front investment as well as ongoing fixed costs. You have asked a local agricultural engineering firm for investment estimates; you have asked your accountant for cost estimates; and you have asked a trusted marketing consultant for sales price estimates. The agricultural engineering firm estimates that you will need an initial net working capital investment of $100,000, and that you will need an initial $2,000,000 investment in facilities and equipment to get the project started. The project will last for 20 years. Your accountant estimates that annual fixed costs will be $750,000 and that variable costs will be $4.50 per Lb of produce. They also estimate a salvage value of $300,000 after dismantling costs. The initial investment will be depreciated straight-line to zero over the 20-year project life. Your marketing consultant estimates that you will be able to sell your produce for $7.75 per Lb. You expect to sell 350,000Lb of produce. The project is not financed with debt. You require a return of 15 percent and the tax rate is 20 percent. Exercise 1.1 Create a pro forma income statement for this project. Exercise 1.2 What is the estimated annual operating cash flow ("OCF") for this project? Exercise 1.3 Create a table with the total cash flows from this project for years o through 20. Exercise 1.4 What is the estimated net present value ("NPV") for this project? Exercise 1.5 What is the estimated internal rate of return (IRR") for this project? Exercise 1.6 Illustrate your findings with an NPV profile for this project. Use discounting rates between o\% and 30%