How did they get the opportunity cost for this question. what did they calculate in order to get it$?$

After spending $10,000 on client-development, you have just been offered a big production contract by a new client. The contract will add $205,000 to your revenues for each of the next five years and it will cost you $95,000 per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreciated, but could be sold for $45,000 now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valued at $27,000 and use the 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $82,000 per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $43,000 per year to help with the expansion. You will have to immediately increase your inventory from $20,000 to $30,000. It will return to $20,000 at the end of the project. Your companys tax rate is 35% and your discount rate is 14.9%. What is the NPV of the contract? Note: Assume that the equipment is put into use in year 1. Calculate the free cash flows below: (Round to the nearest dollar.) Sales - Cost of Goods Sold Gross Profit - Annual Cost - Depreciation EBIT - Tax Incremental Earnings + Depreciation - Incremental Working Capital - Opportunity Cost - Capital Investment Incremental Free Cash Flow Sales - Cost of Goods Sold Year O 0 0 0 0 0 0 0 0 0 10,000 31,850 34,000 (75,850) Year 3 209,000 96,000 Year 1 209,000 96,000 113,000 38,000 6,800 68,200 23,870 44,330 6,800 0 0 0 51,130 Year 4 209,000 96,000 Year 2 209,000 96,000 113,000 38,000 10,880 64,120 22,442 41,678 10,880 52,558 Year 5 209,000 96,000 Gross Profit - Annual Cost - Depreciation EBIT - Tax Incremental Earnings + Depreciation - Incremental Working Capital - Opportunity Cost - Capital Investment Incremental Free Cash Flow The NPV of the project is $ 96,981 . Year 6 113,000 38,000 6,528 68,472 23,965 44,507 6,528 0 0 0 51,035 113,000 38,000 3,917 71,083 24,879 46,204 3,917 0 0 0 50,121 113,000 38,000 3,917 71,083 24,879 46,204 3,917 (10,000) 0 0 60,121 1 ,958 (1 ,958) (685) (1 ,273) 1 ,958 685 (Round to the nearest dollar.)