After spending $ 9 comma 400on client-development, you have just been offered a big production contract by a new client. The contract will add $ 207 comma 000to your revenues for each of the next five years and it will cost you $ 98 comma 000per year to make the additional product. You will have to use some existing equipment and buy new equipment aswell. The existing equipment is fully depreciated, but could be sold for $ 51 comma 000now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valuedat $ 33 comma 000and use the 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $ 85 comma 000per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $ 39 comma 000per year to help with the expansion. You will have to immediately increase your inventory from $ 20 comma 000 to $ 30 comma 000 It will return to $ 20 comma 000 at the end of the project. Your company's tax rate is 35 % and your discount rate is 14.3 %

What is the NPV of the contract? Note: Assume that the equipment is put into use in year 1.

Do this for the following three more years

,Year 0 Sales,$,0 - Cost of Goods Sold,$,0 Gross Profit,$,0 - Annual Cost,$,0 - Depreciation,$,0 EBIT,$,0 - Tax,$,0 Incremental Earnings,$, + Depreciation,$, - Incremental Working Capital,$, - Opportunity Cost,$, - Capital Investment,$, Incremental Free Cash Flow,$

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