Problem 4 (17 marks) M Factory engaged a business strategy consultant last year to do a market study related to the introduction of its new hair shampoo line. The study cost $1,500,000. The study concluded that if the product were to be launched, the company would be able to sell $42,000,000 worth of the new shampoo annually. However, there would a corresponding $22,000,000 in variable costs, as well as an additional $14,000,000 in fixed costs. The project will require an investment of $9,200,000 to build the production facilities on land the company currently owns with a value of $2,500,000. The company will spend $4,000,000 in net working capital. The production facilities belong in CCA class that has a CCA rate of 15%. The asset class will remain open at the end of the project. The project is expected to last 9 years and the assets will be sold for an estimated $1,200,000 (excluding the land). M Factory has a tax rate of 35% and projects require a 15 percent rate of return. Assume the Accelerated Investment Incentive applies. a. Calculate the initial investment for the project (CF0). (4 marks) b. Calculate the present value of the incremental operational cashflows after tax for the project. (4 marks) c. Calculate the present value of the CCA tax shield. (3 marks) d. Calculate the present value of the terminal (ending) cash flows. (3 marks) e. Calculate the NPV of the project. Should the project be accepted? Explain your decision. ( 3 marks)