3. NPV of New Project Your company has been considering launching a new product. Designing the new product has already cost $500,000. The company estimates that it will sell 800,000 units per year for $3 per unit and the production will cost $1 per unit. Production will end after year 3 (zero sales from year 4 onward). New equipment costing $1 million will be required. The equipment will be depreciated to zero using straight-line schedule over the life time of 7 years. You plan to sell the equipment for book value at the end of year 3. Your current level of working capital is $300,000. The new product will require the working capital to increase to a level of $400,000 in year 1, in year 2 the level will be $350,000, and finally in year 3 the level will return to $300,000. Your tax rate is 21%. The discount rate for this project is 10%. Do the capital budgeting analysis for this project and calculate its NPV.