Estimate Relevant Cash Flows: Mariposa Recreational Products Corporation produces skateboards for street use. As a result of recent promotion of the sport, the company is considering expanding its facilities to increase production and sales by 35,000 units per year. The expansion will require an immediate outlay of $740,000 for the specialized equipment required for skateboard assembly. The company estimates the useful life of the project will be seven years. The company uses straight-line depreciation for book purposes but will depreciate for tax purposes as follows: Year I, $140,000; Year 2, $240,000; and Years 3-5, $120,000 per year. Once the equipment is installed, it has no salvage value. The project requires an estimated cash and accounts receivable balance of $10,000. The project will also require $17,000 in working inventory. All $27,000 working capital will be liquidated at the end of the last year of the project life. The assembled skateboards sell for $29 wholesale each. The cost of materials for unassembled skateboards is $17 per kit, including shipping. In addition to the $17 cost of the unassembled parts, there is a cost of $6.50 per kit for assembly labor, power, and other variable overhead. All variable overhead is included in the $6.50 charge, and all such variable overhead requires current cash outlays. The existing fixed overhead of the factory and equipment amounts to $162,857, including the book depreciation, for financial reporting purposes, on the new equip- ment. Except for the equipment depreciation, all of these fixed overhead items require current cash outlays. All fixed overhead is included in this amount. A 12 percent rate is applicable for investment evaluation purposes. The tax rate applicable to the project income is 40 percent.

Required: Prepare a schedule showing the net present value for the project with supporting details.