Alpha tires makes tiers. A project is being considered in which they will have a 4 yr US contract in Brazil. They have never done business there. Alpha has spent $45,000 making a study last year in order to find out if the project is good.

The project is expected to produce yearly sales of $555,000. Variable cost will be 22% of the sales, annual fixed costs will be $187,000

At the beginning this 4 yr project will require $50,000 increase in net working capital, the equipment required will cost $630,000 and will be depreciated to zero in a straight line over 5 yrs. The equipment will be sold at the end of the project to a partner for $175,000. The relevant tax rate is 32%. The company's WACC is 17%, but for this project management will add another 3% to capture the foreign risk in their required rate of return.

Show the cash flows and calculate NPV and IRR (ignore payback).

NPV = ?

IRR = ?

Which one is better and why

year 0 OCF = ?

year 1 OCF = ?

year 2 OCF = ?

year 3 OCF = ?

year 4 OCF = ?

year 1 NWC =

year 2 NWC =

year 3 NWC =

year 4 NWC =

year 1 NCS =

year 2 NCS =

year 3 NCS =

year 4 NCS =