Assume that Myrtle Douglas is compensated as a function of net income. Specifically, Myrtle receives a bonus of 10% of the after-tax net income. What is the NPV of the project from Myrtle's perspective, assuming she has the same discount rate as the firm (10%). Please do not consider the bonus as part of the income calculation. Also, remember that Myrtle is retiring at the end of 1998.

Myrtle Douglass is divisional manager for Crawford Electronics. She is considering introducing a new remote control device to the existing product line. Introducing the new remote control would require the purchase of a new machine. This machine would cost $10,000, last for two years, and have zero salvage value at the end of the two years. Myrtle estimates the following production, sales, and costs for this new product line in each of the two years that the new remote control would be produced: Year 1999 Production (units) 10,000 15,000 Sales (units) 8,000 17,000 Variable production cost per unit $5.00 $5.00 Selling price per unit $8.00 $8.00 Variable S&A per unit $1.00 $1.00 Total Fixed S&A Expenses $2,500 $3,000 Crawford Electronics uses full absorption for both book and tax purposes. It is company policy that straight line depreciation is used for all production machinery, and that fixed overhead is allocated on the basis of units produced. Crawford Electronics uses a LIFO (last in, first out) inventory flow assumption. Crawford Electronics uses a 10% discount rate for all net present value and residual income calculations, and faces a tax rate of 40%. For purposes of the analysis, assume that all sales of the new remote control will be paid in cash, and that all expenses associated with producing the new remote control will be paid immediately in cash