A factory is consider the following new production line:

Year 1 Initial cost to renew its production line is $737,947

Lose $440,943 in contribution margin in Year 1, and the production will stop for Year 1.

Starting from Year 2 with new production line :

Reducing variable cost per unit by 23%

Increased in fixed cost, starting at Year 1 of $100,000, and increase $50,000 each year thereafter.

Without new production line:

2 million unit per year

Variable cost $3 per unit

Fixed cost :2.5 million

Sales price without new line:$5 per unit

Sales price with new production line line:

4.6 per unit , and able to sell 2.3 million unit per year.

Depreciation: $145,555 same for every year. (which count only when the new production line is constructed)

At the end of Year 5, the factory will sell its business regardless of any decision.

With a new production line, the price would be 2.3 million.

Without a new production line, the price would be 2 million.

Please find what amount it should include to do NPV calculation in YEAR 1 to YEAR 5.