Part IV: Time Value of Money ( 25 points) Ignore any income tax effects. 1. (25 points) On January 1st,2022, Golden Sailing AG, a manufacturer of custom luxury yachts, started to build a yacht to fulfill a customer order. Golden Sailing plans to finish the yacht at the end of June 2023. Golden Sailing estimates that it will incur monthly production costs of $600,000 in 2022 but expects that inflation will increase monthly production costs to $700,000 in 2023 . Golden Sailing pays its production costs at the end of the month they occur. Starting July 2023 , Golden Sailing will no longer incur production costs for the yacht. Golden Sailing needs to rent additional production space to manufacture the yacht. The rent is $840,000 per year and is paid in advance for the whole year on January 1st of 2022 and 2023 . As such, Golden Sailing capitalizes a prepaid rent asset at the beginning of each year and recognizes the corresponding rent expense at end of each month of the year. Before returning the property to the landlord at the end of December 2023, Golden Sailing will have to clean up the space. It will hire an external contractor for that. The external contractor is expected to be paid $100,000 at the end of September and December of 2023. According to industry standard, the customer makes a pre-payment of $4,000,000 on January 1st,2022, to get the production started and a final payment when the yacht is finished on June 30,2023. Golden Sailing discounts cash flows at a 18% annual interest rate that compounds monthly. What is the final payment that Golden Sailing has to charge its customer to earn the 18% annual return compounding monthly, i.e., for the project to have NPV =0