A division of ABBOX Corporation has developed the concept of a new product. Production of the product would require \(\$ 10\) million in initial capital expenditure. It is anticipated that 1 million units would be sold each year for 5 years, and then the product would be obsolete and production would cease. Each year's production would require 10,000 hours of labor and 100 tons of raw material. Currently the average wage rate is \(\$ 30\) per hour and the cost of the raw material is \(\$ 100\) per ton. The product would sell for \(\$ 3.30\) per unit, and this price is expected to be maintained (in real terms). ABBOX management likes to use a \(12 \%\) discount rate for projects of this type and faces a \(34 \%\) tax rate on profit. The initial capital expenditure can be depreciated in a straight line fashion over 5 years. In its first analysis of this project, management did not apply inflation factors to the extrapolated revenues and operating costs. What present value did they obtain? How would the answer change if an inflation rate of \(4 \%\) were applied?