Bose Company is considering a proposal to enter a new line of business. In reviewing the proposal, the companys CFO is considering the following facts:

The new business will require the company to purchase additional fixed assets that will cost $2,500,000 at t=0.For tax and accounting purposes, these costs will be depreciated to 0 using straight line depreciation.

The equipment will be housed in the firms existing facility (built 10 years ago).The facility originally cost $5,000,000.If it is not used for the project, it can be sold now for $800,000.(This is the after tax value of the facility.)If it is used for the project, it will have no value at the end of 4 years.

At the end of four years, the company will get out of the business and will sell the fixed assets for $300,000.

A major factor in the decision to go ahead with the project was the results of its testing program.Two years ago, the company spent $500,000 in its test program for this project.

The project will require a $400,000 increase in inventory and a $200,000 increase in accounts payable at t=0. All working capital will be recovered in the last (terminal) year of the project.

The tax rate is 40%

The new business is expected to generate $10 million in sales in year 1.The operating costs, excluding depreciation will be $4 million in year 1.Revenues and costs will increase at the inflation rate of 3% starting in year 2.

The discount rate is 10%. What is the NPV of this project?

please respond using excel! USE NPV formula =NPV(