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After spending $9,000 on client-development, you have just been offered a dig production contract by a new client. The contract wil add $192,000 to your

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After spending $9,000 on client-development, you have just been offered a dig production contract by a new client. The contract wil add $192,000 to your revenues for each of the next five years and it wit cost you $102,000 per year to make the additionol product You will hove to use some exigting equipment and buy new equipment as well. The existing equipment is fully depreciated, but could will be worthless at the end of the project. Your current production manoger earns $75,000 per year. Since she is busy with ongoing projocts, you are planning to hire an assistant al $45,000 per year to help with the exparsion. You wil have to mmedistely increase your inventory from $20,000 to $30,000. It will retum to $20,000 at the end of the project Your company's tax rate is 21% and your decount rate is 15.9%. What is the NPV of the contract? (Note. Assume that the equipment is put into use in year f ) Calculate the tree cash flows below for years 0 through 2 . (Round to the nearest dollar)

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