net present value, the profitability index, and the internal rate of return. Apply the appropriate decision criteria.

Data table

a$.$ Determine the free cash flows associated with the project.

Cost of new plant and equipment: $$14,800,000$

Shipping and installation costs: $$210,000$

Unit sales:

Sales price per unit:

Variable cost per unit:

Annual fixed costs:

Working$-$capital requirements:

$$310/$unit in years $1$ through $4,$$$260/$unit in year $5$

$$100/$unit

$$800,000$

There will be an initial working capital requirement of

$$180,000$ to get production started. For each year, the

total investment in net working capital will be equal to $12$

percent of the dollar value of sales for that year. Thus, the

investment in working capital will increase during years $1$

through $3,$ then decrease in year $4.$ Finally, all working

capital is liquidated at the termination of the project at the

end of year $5.$

Use the simplified straight$-$line method over $5$ years. It is

assumed that the plant and equipment will have no

salvage value after $5$ years.

The depreciation method:

The FCF in year $0$ is $9,($Round to the nearest dollar.$)$

$($Click on the icon $$ in order to copy its contents into a spreadsheet.$)$