(Calculating free cash flows) At present, Solartech skateboards is considering expanding its peoduct line to include gas-powered skatebcards; however, it is questionablo how weil they will be received by skeseboarders. Although you feol there is a 50 percont chance you wit sell 10,000 of these per year for 10 yoars (afbor wtich time this project is oxpected to shot dowa because solar-powered skateboards wa become more popular), you also recognize that there is a 25 percent chance that you will only sell 1.000 and also a 25 percent chance you will sel 10,000 . The gas skateboards would seli for $140 each and have a variable cost of 530 each. Regardiess of how many you sell, the annual fored costs associated with production would be $160,000. in addition, the would be an intial nxpendiure of $1,000,000 assoclated with the purchase of new protuction oqupment which will be depreciated using the borius depreciation method in year 1 . Because of the number of asores that wili need inventory, the working capital requecements are the same regardiest of the level of sales. This project will require a one-tme intid invesiment of $60,000 in net working capital, and working-capital investmect will be recovered when the project is thut down. Finally. assume that the fimn's marginal tax rete is 25 percent. a. What is the initial oulata associated with the project? b. What are the annual free cash flows associated with the project for years 1, and 2 through 9 under each sales forecast? What are the oxpected antual freo cash flews for year 1 , and years 2 through 9 ? c. What is the terminal cash flow in year 10 (that is, What is the free cash fow in year 10 plus any additional cash fows associated with the lermination of the project)? d. Using the expected free cash flows, what is the projects NPV given a required rate of retum of 11 percent? What would the projecrs NPV be if 10.000 skateboarde were sold? a. What is the initial outlay associated with this peoject? (Round to the nearest dollac.)