$3.$ Your manager gives you the following information on a potential investment project and asks to evaluate:

a$.$ Revenues in each of years $13=$ $$20,000$

b$.$ Year $0$ initial investment $=$ $$40,000$

c$.$ Inventory level $=$ $$10,000$ in year $1,$ $$10,500$ in year $2,$ and $$5,000$ in year $3$

d$.$ Production costs $=$ $$7,000$ in each of years $13$

e$.$ Salvage value $=$ $$12,000$ in year $4$

f$.$ Depreciation $=100\%$ immediate bonus depreciation

g$.$ Tax rate $=21\%$

Draw up a set of cash flow forecasts as in slides p$\mathrm{.}22.$ If the cost of capital is $8\%,$ what is the

project$$s NPV$?$ Assume that, if the project generates losses, those losses can be used to offset

profits elsewhere in the business.