XYZ, Inc. is considering a 5-year project. The production will require net working capital investments each year equal to \( \mathbf{1 5 \%} \) of the projected sales . Total fixed costs are \( \mathbf{\$ 1 , 3 5 0 , 0 0 0} \) per year, variable production costs are \( \$ \mathbf{2 1 0} \) per unit, and the units are priced at \( \mathbf{\$ 3 4 5} \) each. The equipment needed to begin production has an intalled cost of \( \mathbf{\$ 2 3 , 0 0 0 , 0 0 0} \). The equipment is qualified as seven-year MACRS property. The company is in the 35\% marginal tax bracket and has a required rate of return on all its projects of \( \mathbf{1 8 \%} \). Salvage value will be the same as the book value at the end of year 5 . Please finish the project valuation and answer the following questions. All the colored cells need to be filled in.
\begin{tabular}{|c|c|c|c|c|c|c|c|c|}
\hline & & & & & & & & \\
\hline Input Area & & & & & & & & \\
\hline Year & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 \\
\hline \begin{tabular}{l}
Projected unit \\
sales
\end{tabular} & 80,000 & 85,000 & 90,000 & 95,000 & 95,000 & 0 & 0 & 0 \\
\hline MACRS Rates & \( 14.29 \% \) & \( 24.49 \% \) & \( 17.49 \% \) & \( 12.49 \% \) & \( 8.93 \% \) & \( 8.92 \% \) & 8.93\% & \( 4.46 \% \) \\
\hline & NWC/year (\% of projecte & & & \( 15 \% \) & & & & \\
\hline & Fixed costs & & & \$ \( 1,350,000 \) & & & & \\
\hline & Variable cost per unit & & & \$210 & & & & \\
\hline & Unit price & & & \( \$ 345 \) & & & & \\
\hline & Equipment cost, year 0 & & & \$23,000,000 & & & & \\
\hline & Tax Rate & & & \( 35 \% \) & & & & \\
\hline & Required return & & & \( 18 \% \) & & & & \\
\hline
\end{tabular}
1. Please complete the cash flow estimation table. What are the projected cash flows for each year? (5 points)
\begin{tabular}{|c|c|c|c|c|c|c|c|}
\hline & & & & & & & \\
\hline & & & & & & & \\
\hline & & & & & & & \\
\hline & Year & Q & 1 & 2 & 3 & 4 & 5 \\
\hline Ending book value & & \$23,000,000 & \( \$ 19,713,300 \) & \$14,885,513 & & & \\
\hline Depreciation (annual) & & & & & & & \\
\hline
\end{tabular}
