Problem $4$:

XYZ Co$.$ is considering a new project. The machine required for the project costs $$3\mathrm{.}86$ million.

It$$s predicted that sales related to the project will be $$2\mathrm{.}56$ million per year for the next four

years, after which the market will cease to exist. The machine will be depreciated down to zero

over its four$-$year economic life using the straight$-$line method. Cost of goods sold and operating

expenses related to the project are predicted to be $20$ percent of sales. XYZ Co$.$ also needs to add

net working capital of $$210,000$ immediately. The additional net working capital will be

recovered in full at the end of the project$$s life. The corporate tax rate is $40$ percent. The required

rate of return for the project is $14$ percent.

What is the value of the NPV for this project?