Sony International has an investment opportunity to produce a new stereo HDTV. The required investment on January 1 of this year is $75 million. The firm will depreciate the investment to zero using the straight-line method over four years. The investment has no resale value after completion of the project. The firm is in the 34 percent tax bracket. The price of the product will be $450 per unit, in real terms, and will not change over the life of the project. Labor costs for Year 1 will be $18.50 per hour, in real terms, and will increase at 2 percent per year in real terms. Energy costs for Year 1 will be $6.40 per physical unit, in real terms, and will increase at 3 percent per year in real terms. The inflation rate is 4 percent per year. Revenues are received and costs are paid at year-end. Refer to the table below for the production schedule.

The real discount rate for Sony is 8 percent. Calculate the NPV of this project.

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YEAR 1YEAR2 YEAR 3 YEAR 4 Physical production, in units 180,000 210,000 0,000150,000 2,350,000 2,870,000 3,100,000 1,950,000 Energy input, physical units 190,500 230,000 270,000 170,000 Labor input, in hours