Mw sponding 15.700 on dient development you have to bered a big production contract by a new client. The contract will add 5204,000 to your revenues for each of the next five years and it will cost you I per year la mall product you will foreto some sing equipment and by wequipment as well. The editing woment is fully deprecated, but could be sold for 352.000 now if you we wend of the project. You webwed 535.000 year MACRS schedule to depreciate it will be worthless at the end of the project Your current production manager ca 154.000 per cena a bowy wie ongoing projects, you are arining to hire at 544.000 per year to help with the expansion. You will leave to immediately wore you want from 120,000 to $30.000 will return to 120.000 at the end of the project. Your company tax rate 21% and your count 16.3%. What is the NPV of the contract (Nore Aanume me) UTID Cenow below for years and to resto Year Year 2 Sale 5 5 Custom Sold O Prote $ 5 -A Cost Depreciation E61 $ $ 1 5 Incalamig + Deprecat Total Warming Call Opportunity Con -Capitale Inces Cash Flow y After spending $9,700 on client-development, you have just been offered a big production contract by a new client. The contract will add $204,000 to your revenues for each of the next five years and it will cost you $99,000 per year to make the additional product. You will have to use some existing equipment and buy new i equipment as well. The existing equipment is fully depreciated, but could be sold for $52.000 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 $35.000 and use the 5-year MACRS schedule to depreciate it it will be worthless at the end of the project. Your current production manager eams $84,000 per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $44,000 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 company's tax rate is 21% and your discount rate is 15.3%. What is the NPV of the contract? (Note. Assume that the equipment is put into use in year 1.) CREED) Calculate the free cash flows below for years 0 through 2: (Round to the nearest dollari Year 1 Year 0 Year 2 Sales $ Cost of Goods Sold Gross Profit $ Tod arce Annual Cost Depreciation EBIT -Tax Incremental Earnings + Depreciation - Incremental Working Capital Opportunity Cost -Capital Investment Incremental Free Cash Flow S