linkeria is considering introducing a new line of hand scanners that can be used to copy material and then download it into a personal computer. These scanners are expected to sell for an average price of $99 each, and the company analysts performing the analysis expect that the firm can sell 101,000 units per year at this price for a period of five years, after which time they expect demand for the product to end as a result of new technology. In addition, variable costs are expected to be $18 per unit and fixed costs, not including depreciation, are forecast to be $1,050,000 per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $10.2 million that has no residual or salvage value, and will have an expected life of five years. In addition, the firm expects it will have to invest an additional $305,000 in working capital to support the new business. Other pertinent information concerning the business venture is provided here:

Initial cost of the machine	$10,200,000
Expected life	5 years
Salvage value of the machine	$0
Working capital requirement	$305,000
Depreciation method	straight line
Depreciation expense	$2,040,000 per year
Cash fixed costslong dashexcluding depreciation	$1,050,000 per year
Variable costs per unit	$18
Required rate of return or cost of capital	10.4%
Tax rate	34%