P12-14 Modified (use the template below for problem setup) As part of its planning for the coming Christmas season, Crowell Motorsports is considering whether to expand its product line that currently consists of skateboards to include electric powered skateboards. The company feels it can sell 4,000 of these per year for 10 years after which time this project is expected to shut down with solar powered skateboards taking over). Each electric powered skateboard would have variable costs of $175 and sell for $350; annual fixed costs associated with production would be $435,000 in addition, there would be a $750,000 initial expenditure associated with the purchase of new production equipment it is assumed that the simplified straight-line method would be used to depreciate this initial expenditure down to mero over 10 years. The project would also require a one-time initial investment of $200,000 in net working capital associated with inventory, and this working capital Investment would be recovered when the project is shut down. Finally, assume that the firm's marginal tax rate 25% a. What is the initial cash outlay osciated with this project? b. What are the annual e cash flows esociated with this project for years 1-97 Who is the terminal cash flow in year 10 (that is what is the free cash flow in year 10 plus any additional cash flows associated with the termination of the project?) d. What is the projects NPV given a 10 required rate of retum? INPUTS (in Blues Tax Rate Required Rate of Return Years Cost of the New Equipment Initial Working Capital Annual Units Sold Sale Price per unit Variable cost per unit Annual fixed costs 6 7 10 Year Units Sold Sale Price Vartate Costa Analised Cost Deprecate Step 11 Calate Net Operating Cash Flows Salve vaatie Conti Deprecat Net Operating income Le Tours Corting Income after trees preciation Step 2: Gledate Working Capital (W Requirements Working Capital Recurement Sus Calculate Capital Expenditure (CAPEX) Requirements Captal Expenditure CAPE Reparements Step 4Cate Free Cash Flow Fine Cash Flow