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Drilling-Easy (DE) Inc. Currently has two products, low priced drills and a line of smart drill bits, DE Inc. has decided to sell a new

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Drilling-Easy (DE) Inc. Currently has two products, low priced drills and a line of smart drill bits, DE Inc. has decided to sell a new line of high-priced drils. Sales for the new line of drills are estimated at $25 million a year. Annual variable costs are 60% of sales. The project is expected to last 10 years. In addition to the production variable costs, the fixed costs each year will be $4,000,000. The company has spent $1,500,000 in a marketing and research study that determined the company will gain $11 million in sales a year of its existing line of smart drill bits. The production variable cost of these sales is $9 million a year. The plant and equipment required for producing the high-priced drills costs $12,000,000 and will be depreciated down to zero over 10 years using straight-line depreciation. It is expected that the plant and equipment can be sold for $5,000,000 at the end of the project. The project will also require an increase in not working capital of $4,000,000 today that will be returned at the end of the project. The tax rate is 20 percent and the require rate of return for this project is 12% a. What is the initial outlay (10) for this project? The Initial Outlay is $(Round your answer to the nearest dollar - no decimals - and commas are required to separate thousands and millions. Use negative sign for negative cash Rows - do not use parenthesis). b. What is the operating cash flows (OCF) for each of the years for this project? The OCF for each year of the project are $ . (Round your answer to the nearest dollar - no decimals - and commes are required to separate thousands and millions Use negativo sign for negative cash flows - do not use parenthesis) c. What is the termination value (TV) cash flow (aka recovery cost or after-tax salvage value, or liquidation value of the assets) at the end of the project? The termination value at the end of the project is $. (Round your answer to the nearest dollar - no decimals - and commas are requred to separate thousands and $ millions. Use negative sign for negative cash flows - do not use parenthesis) d. What is the NPV of this project? The NPV of this project is $(Round your answer to the nearest dollar- no decimals and commas are required to separate thousands and milions Uso negative sign for negative cash flows do not use parenthesis)

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