$7.$ Revenues generated by the new product are forecast as follows.

Year Revenue

$1$ $$50,000$

$240,000$

$340,000$

$430,000$

$515,000$

$60$

Expenses are expected to be $50\%$ of revenues, and working capital required at the beginning of each year is expected to be $20$ percent of revenues in the following year. The product requires an immediate investment of $$55,000$ in plants and equipment.

a$.$ What is the initial investment in the product? Remember working capital.

b$.$ If the plant and equipment are depreciated over $5$ years to a salvage value of zero using straight$-$line depreciation, and the firm$$s tax rate is $21\%,$ what are the project cash flow in each year?

c$.$ If the opportunity cost of capital is $12$ percent, what is project NPV$?$

d$.$ What is the project IRR?