1. A firm is evaluating a project which requires an investment of $5,600,000 in plant and equipment to produce a new multi-vitamin. The equipment will be depreciated straight line to zero over the projects 4-year life. At the end of the project, the equipment will be salvaged for $750,000. Sales will be $3,000,000 beginning in year 1 and will increase by 5% each year of the projects life. COGS will be 30% of sales. GS&A will be 8% of sales. The project will require an investment in NWC estimated at 10% of sales with full recovery at the end of the project. The project is expected to increase sales of plastic containers it produces in another division by $30,000 each year. Assume the firms tax rate = .34 and wacc = 10%. Calculate FCFs for each year of the project and determine the NPV.

(NPV = $581,583.60)