After spending $500,000 to study the potential market for a new specialty chemical, Hart Industries is considering a new six-year project requiring an initial investment in new construction and equipment. The new chemical is expected to reduce after-tax cash flows of the companys existing products by $1 million each year. The company will purchase $6,000,000 in new plant and equipment. The IRS will allow Hart to depreciate the plant and equipment to a salvage value of 0 on straight-line basis over a six-year useful life. At the end of year six they expect to be able to sell the plant and equipment for $2,000,000. The firm estimates revenue will be $22 million per year for each of the next six years. Assume all of the companys revenue has a variable cost of 70% of revenue. Fixed costs for the project are estimated to be $3,000,000 annually Start-up net working capital requirements for the project are expected to be $1,000,000 (Assume net working capital is 0 before Hart takes the project). In addition, the company will reduce working capital $100,000 each year due to increased efficiencies. At the end of the six-year project, the net working capital will no longer be required. Should you include the $500,000 spent on studying the potential market as cost when you analyze the project? Why? Should you include the $1 million after-tax cash flows reduction when you analyze the project? Why? Harts opportunity cost of capital is 15%, their marginal tax rate is 30%. Calculate the NPV of this project.