AAA Corp. currently has one product, high-priced lawn mowers. AAA Corp. has decided to sell a new line of medium-priced lawn mowers. The building and machinery for producing this new line is estimated to cost

$10,000,000

and it will be depreciated down to zero over

10

years using straight-line depreciation. Also, an investment today on working capital in the amount of

$2,000,000

is needed. The working capital will be recovered at the end of the project. Sales for the new line of lawn mowers are estimated at

$29

million a year. Annual variable costs are

60%

of sales. The project is expected to last

5

years. In addition to the production variable costs, the fixed costs each year will be

$4,000,000.

The company has spent

$1,500,000

in a marketing study that determined the company will lose

$12

million in sales a year of its existing high-priced lawn mowers. The production variable cost of these sales is

$10

million a year. It is expected that at the end of the project, the building and machinery can be sold for

$2,000,000.

The tax rate is

30

percent and the cost of capital is

8%.

a. What is the initial outlay (IO) for this project?

The Initial Outlay is

$enter your response here.

(Round your answer to the nearest dollar - no decimals - and commas are required to separate thousands and millions. Use negative sign for negative cash flows - do not use parenthesis).

b. What is the operating cash flows (OCF) for each of the years for this project?

The OCF for each year of the project are

$enter your response here.

(Round your answer to the nearest dollar - no decimals - and commas are required to separate thousands and millions).

c. What is the termination value (TV) cash flow (aka recovery cost or after-tax salvage value, or liquidation value of the assets) at the end of the project?

The termination value at the end of the project is

$enter your response here.

(Round your answer to two the nearest dollar - no decimals - and commas are required to separate thousands and millions).

d. What is the NPV of this project?

The NPV of this project is

$enter your response here.

(Round your answer to the nearest dollar - no decimals - and commas are required to separate thousands and millions. Use negative sign for negative cash flows - do not use

parenthesis).