Orioles Company is considering a new four-year expansion project that requires an initial purchase of equipment of $2.7 million ($2,700,000). The project requires an increase in net working capital of 700,000 in year 0; it will be recovered at the end of year 4. The equipment will be depreciated using MACRS with the following percentages: year 1: 33,33%, year 2: 44.45%; year 3: 14.81%; year 4: 7.41%. The project is estimated to generate $2,200,000 in annual sales, with costs (not including depreciation) of $990,000. The used equipment will be sold for $20,000 at the end of year 4. The tax rate is 25% and the required return (WACC) is 14%. a. Calculate the year 0 free cash flows b. Calculate the end of life cash flows c. Calculate the project's Net Present Value. d. Calculate the project's IRR (Internal Rate of Return).

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