FINS 1613 BUSINESSFINANCESession 1, 2011Lecture 6 Practice ProblemThe Sydney Roosters are considering selling officially licensed actual roosters, which will be genetically enhanced to sing “Roosterman” on game day. The biotech research ensures that the project will have significant upfront costs as the commercial need for a singing chicken has never been recognized before. However, the project will later generate positive cash flows as each supporter faithfully adopts his or her own rooster. For some reason, the project has a three-year life. Details to compute the project incremental cash flows are given below:A.The team expects to sell 20,000 roosters in the first year. Sales are expected to grow by 40% each year until the third year. Rooster will sell for $100. B.Variable costs, such as chicken coop maintenance and feed costs, are expected to be $10 per each rooster sold. C.The team will hire: i)five chicken farmers at $75,000 per farmer annuallyii)
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