Railback Battery Systems Following is the seven-year forecastfor a new venture called Railback Battery Systems:

Year	2020	2021	2022	2023	2024	2025	2026
EBIT	($1,000)	($900)	$200	$1,200	$2,500	$3,000	$3,050
CapitalExpenditures	$550	$350	$200	$175	$175	$160	$150
Changesin Working Capital	$400	$300	$200	$100	$100	($100)	($100)
Depreciation	$40	$80	$125	$150	$150	$150	$150

Part 1:

Beginning after year 2026 the annual growth in EBIT is expectedto be 1.5%, a rate that is projected to be constant over Railback'slife as an enterprise. Beginning in 2026 Railback's capitalexpenditures and depreciation are expected to offset each other(capex - depreciation = 0) and year to year changes in workingcapital are expected to be zero (working capital levels remainconstant year over year). For discounting purposes consider 2020 asyear 1. Assume a tax rate is 21% and a cost of capital of 7.75%Question: Determine the NPV of Railback Battery Systems Free CashFlow for the years 2020 - 2026. HINT: Remember to account for losscarry-forwards when determining income taxes. The answer to thisquestion was determined in Excel. Your answer may deviate slightlydepending upon differences in truncation and rounding. Answersbelow are in $000.

Part 2:

Calculate the fair market value (NPV) for Railback BatterySystems. For this problem assume that the Net Present Value ofRailback's free cash flow for the period 2020 - 2026 is $3000(NOTE its not $3000 but make this assumption incase the answer you determined in the first question was incorrect.Assume no underlying changes to any of the data in the problem.DO NOT USE YOUR ANSWER FROM THE QUESTION ABOVE. All ANSWERSARE IN $000