FIN330-004 (F321): PRINCIPLES OF FINANCE Ahmed Al Zadijall 11/08/21 12:54 PM Homework: Chapter 12 Homework Question 9, P12-15 (simi... HW Score: 70.37%, 6.33 of 9 points Points: 0 of 1 Save Part 1 of 4 (Calculating project cash flows and NPV) You are considering new eliptical trainers and you feel you can sell 6,000 of these per year for 5 years after which time this project is expected to shut down when it is teamed that being fit is unhealthy The eliptical trainers would sell for $1,300 each with variable costs of $400 for each one produced, and annual fixed costs associated with production would be $700.000. In addition, there would be a $3,500,000 initial expenditure associated with the purchase of new production equipment. It is assumed that this initial expenditure will be depreciated using the simplified straight-line method down to zero over 5 years. This project will also require a one-time initial investment of $800,000 in networking capital associated with inventory, and it is assumed that this working capital investment will be recovered when the project shut down. Finally, assume that the firm's tax rate is 35 percent a. What is the initial outlay associated with this project? b. What are the annual net cash flows associated with this project for years through 47 What is the terminal cash flow in year 5 (that is, the free cash flow in year 5 plus any additional cash flows associated with termination of the project d. NPV a rate of return of