Charm Co, a software company, has developed a new game, 'Fingo', which it plans to launch in the near future. Sales of the new game are expected to be very strong, following a favourable review by a popular PC magazine. Charm Co has been informed that the review will give the game a 'Best Buy recommendation. Sales volumes, production volumes and selling prices for 'Fingo' over its four year life are expected to be as follows: Year Sales and production (units) 150,000 70,000 60,000 60,000 Selling price ($ per game) $25 $24 $23 $22 Financial information on 'Fingo' for the first year of production is as follows: Direct material cost $5.40 per game Other variable production cost $6.00 per game Advertising costs to stimulate demand are expected to be $650,000 in the first year of production and $100,000 in the second year of production. No advertising costs are expected in the third and fourth years of production. 'Fingo' will be produced on a new production machine costing $800,000. Charm Co pays tax on profit at a rate of 30% per year and tax liabilities are settled in the year in which they arise. Charm Co uses an after-tax discount rate of 1096 when appraising new capital investments, Ignore both inflation and tax-allowable depreciation. Required: Calculate the net present value of the proposed investment and comment on your findings. (a)