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 comma 000 comma 000 and it will be depreciated down to zero over 20 years using straight-line depreciation. Also, an investment today on working capital in the amount of $2 comma 000 comma 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 $19 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 $2 comma 000 comma 000. The company has spent $1 comma 500 comma 000 in a marketing study that determined the company will lose $10 million in sales a year of its existing high-priced lawn mowers. The production variable cost of these sales is $8 million a year. It is expected that at the end of the project, the building and machinery can be sold for $8 comma 000 comma 000. The tax rate is 30 percent and the cost of capital is 10%.

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

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

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?

d. What is the NPV of this project?