For questions 13 through 16 please use the Business Investment proposal described below. Irmanente Automotive Inc. manufactures custom electric vehicles and is evaluating the economics of expanding its production facility to enable it to increase sales for the next 4 years. Last year, the company paid the Ardmore Economic Development Authority $250,000 to do an extensive marketing analysis for the proposed expansion. The current expansion scenario would have total construction costs of $1.6 million and it would take about 90 days to complete (i.e., essentially up-front). The Company would also put in $400 thousand of new machinery. Inventory (raw materials, work-in-process, finished goods) investment needed for the expansion would be $347 thousand. Annual depreciation associated with the expansion would be $400 thousand per year for the next four years. The company expects to borrow 100% of the upfront costs and thereby incur $704 thousand in total interest expense over the life of the project. Incremental sales for this project are estimated to be $850 thousand for Year 1; $1.9 million for Year 2; $2.1 million for Year 3; and $1.0 million for Year 4. Cost of goods sold is estimated to be approximately 50% of total sales, and additional fixed costs are estimated to be $150 thousand per year. At the end of the projects estimated life in Year 4, the company estimates it will be able to sell excess capital assets for $575,000 and the expected the book value for these items would be $400,000. Also at the end of the project, $65,000 of remaining inventory could be liquidated at cost. The weighted average cost of capital is 18%, its ordinary income tax rate is 40%, and its capital gains tax rate is 15%.

13) What is the Total Upfront Cash Flow for this proposed project?

14)What is the Total Annual Cash Flow for Year 3?

15)What is Terminal Year-specific Cash Flow (i.e., excluding the Annual Operating Cash Flow portion)?

16) Is(Are) there any irrelevant cash flow(s) mentioned in this problem? If so, what is(are) it(they)?