(Comprehensive problem) The Shome Corporation, a firm in the 32 percent marginal tax bracket with a required rate of return or cost of capital of 16 percent, is considering a new project. The project involves the introduction of a new product. This project is expected to last 5 years and then, because this is somewhat of a fad product, be terminated. Given the following information, determine the free cash flows associated with the project, the project's net present value, the profitability index, and the internal rate of return. Apply the appropriate decision criteria.

Cost of new plant and equipment $6,700,000

Shipping and installation costs $160,000

Unit sales

YEAR UNITS SOLD

1 60,000

2 110,000

3 130,000

4 50,000

5 50,000

Sales price per unit $330/unit in years 1 through 4, $280/unit in year 5

Variable cost per unit $150/unit

Annual fixed costs $220,000

a. What is the initial outlay associated with this project?