FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $ $181$ comma $000$ per year. Once in production, the bike is expected to make $ $271$ comma $500$ per year for $10$ years. Assume the cost of capital is $10\%.$

a$.$ Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment?

b$.$ By how much must the cost of capital estimate deviate to change the decision? $($Hint: Use Excel to calculate the IRR.$)$

c$.$ What is the NPV of the investment if the cost of capital is $15\%?$

Note: Assume that all cash flows occur at the end of the appropriate year and that the inflows do not start until year $7.$

a$)$The annual free cash flows for years $1$ to $10$ of buying the chains is $?$

$($Round to the nearest dollar. Enter a free cash outflow as a negative number.$)$

$($b$)$compute the NPV of buying the chains from FCF$.$

$($c$)$ Compute the initial FCF of producing the chains.

$($d$)$Compute the FCF in years from $1$ through $9$ of producing the chains.

$($e$)$ Compute the FCF in year $10$of producing the chains

$($f$)$ Compute the NPV of producing the chains from the FCF

$($G$)$ Compute the difference between the NPV found above.