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Fars and Winds Corporation, a firm in the 34 percent marginal tax bracket with a 15 percent required rate of return or discount rate, is

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Fars and Winds Corporation, a firm in the 34 percent marginal tax bracket with a 15 percent required rate of return or discount rate, is considering a new project that involves the introduction of a new product. This project is expected to last five years and will be terminated after five years with no salvage value. Given the following information, determine the net cash flows associated with the project and the project's NPV, as well as the profitability index. Apply the appropriate decision criteria.- (25 marks) Cost of new plant and equipment: $26,800,000 Shipping and installation costs: $200,000 Unit Sales Page 6 of 8 Sales price per unit: $300 /unit in Years 14,$250 /unit in Year 5 Variable cost per unit: $200/ unit Annual fixed costs: $950,000 Working-capital requirements: There will be an initial working-capital requirement of $200,000 to get production started. For each year, the total investment in net working capital will be equal to 10 percent of the dollar value of sales for that year. Thus, the investment in working capital will increase during Years 1 and 2 and then decrease in Years 3 through 5. Finally, all working capital will be liquidated at the termination of the project at the end of Year 5

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