Problem 3. A company is considering a factory to manufacture fine zithers, which will have a market for 4 years. The machinery necessary for production, costs $4.1 million. The machine will be depreciated as per the MACRS schedule: 33% in 1 st year, 45% in 2 nd, 15% in 3rd and 7% in 4 th year. Scrap value is 450,000 in 4 th year. The current market value of the land on which the factory will be built is $1.6 million. In 4 years, the land could be sold for $1.55 million. Three years ago, the company had bought this land for $1.39 million in anticipation of using it as a toxic waste site but has recently outsourced it to another company. The revenues for each of the four years is estimated to be: \begin{tabular}{|l|r|} \hline Year 1 & 2,610,000 \\ \hline Year 2 & 2,944,800 \\ \hline Year 3 & 3,387,600 \\ \hline Year 4 & 2,246,000 \\ \hline \end{tabular} Fixed Costs are $450,000 per year and Variable costs are 15% of Revenues. Working Capital Investment in Year 0 is 295,000 and will be recovered in Year 4. Assume tax rate is 24% and required rate of return is 13%. a. Estimate the cash received from the scrap in the 4th year after taking into account any taxes on capital gains. b. What is the NPV of the project