Chips Inc. is considering an investment in the production of flash memory technology. Financial projections for the investment are tabulated below. Cash flows are in thousands of dollars and the corporate tax rate is 40%. You may assume that the project will be shut down at the end of Year 4. The appropriate discount rate for the project is 10%. The $10,000 initial investment in fixed assets is projected to have no resale value at the end of four years. You estimate that you will need $1,000 cash on hand at the outset of the project (Year 0) and throughout the life of the project. In addition, you will need to carry an inventory equal to 10% of sales ($1,100), which will need to be in place at the outset of the project (Year 0). All sales are for cash, and all supplies are purchased with cash.

	Year 0	Year 1	Year 2	Year 3	Year 4
Sales revenue		11,000	11,000	11,000	11,000
Operating costs		4,000	4,000	4,000	4,000
Investment in fixed assets	10,000
Depreciation of fixed assets		2,000	2,000	2,000	2,000

1. Use a table similar to the one on the following page to calculate each years cash flow for this investment project.

2. Calculate the net present value of this investment project. Should you invest in this project?