Problem $10-34$ Calculating Project NPV $[$LO$1]$You have been hired as a consultant for Pristine Urban$-$Tech

Zither, Incorporated $($PUTZ$),$ manufacturers of fine zithers. The

market for zithers is growing quickly. The company bought some land

three years ago for $$2\mathrm{.}75$ million in anticipation of using it as a

toxic waste dump site but has recently hired another company to

handle all toxic materials. Based on a recent appraisal, the

company believes it could sell the land for $$2\mathrm{.}95$ million on an

aftertax basis. In four years, the land could be sold for $$3\mathrm{.}15$

million after taxes. The company also hired a marketing firm to

analyze the zither market, at a cost of $$345,000.$ An excerpt of the

marketing report is as follows:$$The zither industry will have a rapid expansion in the next four

years. With the brand name recognition that PUTZ brings to bear, we

feel that the company will be able to sell $6,800,7,500,8,100,$ and

$6,400$ units each year for the next four years, respectively. Again,

capitalizing on the name recognition of PUTZ, we feel that a

premium price of $$510$ can be charged for each zither. Because

zithers appear to be a fad, we feel at the end of the four$-$year

period, sales should be discontinued.$$PUTZ believes that fixed costs for the project will be $$695,000$

per year, and variable costs are $20$ percent of sales. The equipment

necessary for production will cost $$3\mathrm{.}5$ million and will be

depreciated according to a three$-$year MACRS schedule. $($MACRS

Schedule$)$ At the end of the project, the equipment can be scrapped

for $$585,000.$ Net working capital of $$295,000$ will be required

immediately. PUTZ has a tax rate of $22$ percent, and the required

return on the project is $10$ percent. What is the NPV of the

project?$($Do not round intermediate

calculations.$$Enter your answer in dollars, not millions of

dollars, and round your answer to $2$ decimal places, e$.$g$.,$

$1,234,567\mathrm{.}89.)$