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(Calculating free cash fows) You are considering new elliptical trainers and you feel you can sell 4,000 of these per year for 5 years (after

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(Calculating free cash fows) You are considering new elliptical trainers and you feel you can sell 4,000 of these per year for 5 years (after which time this project is expected shut down when it is learned that being fit is unhealthy). The elliptical trainers would sell for $1,000 each and have a variable cost of $500 each. The annual fixed costs associated with production would be $1,400,000. In addition, there would be a $7,000,000 initial expenditure associated with the purchase of new production equipment. It is Bssumed that this initial expenditure will be depreciated using the simplifed straight-line method down to zoro over 5 years. This project will also require a one-lime initial investment of $1,100,000 in net working capital associated with inventory, and that working capital investment will be recovered when the project is shut down. Finally, assume that the firm's marginal tax fate is 32 percent. a. What is the initial outlay associated with this project? b. What are the annual free cash flows associated with this projoct for years 1 through 4 ? c. What is the terminal cash flow in year 5 (that is, what is the free cash flow in year 5 plus any additional cash flows associated with the termination of the project)? d. What is the project's NPV given a required rate of return of 9 percent? a. What is the initial outlay associated with this project? (Round to the nearest dollar.) b. What are the annual free cash flows associated with this project for years 1 through 4 (note that the cash flows for years 1 through 4 are equal)? (Round to the nearest doliat) c. What is the terminal cash flow in year 5 (that is, what is the free cash flow in yoar 5 plus any additional cash flows associated with the tertination of the project?? (Round to the nearest dollar.) d. What is the projects NPV given a required rate of return of 9 percent? (Round to the nearest dotlar)

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