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Part $1$

A bicycle manufacturer currently produces $373$ comma $000$ units a year and expects output levels to remain steady in the future. It buys chains from an outside supplier at a price of $ $1\mathrm{.}90$ a chain. The plant manager believes that it would be cheaper to make these chains rather than buy them. Direct$$ in$-$house production costs are estimated to be only $ $1\mathrm{.}50$ per chain. The necessary machinery would cost $ $296$ comma $000$ and would be obsolete after ten years. This investment could be depreciated to zero for tax purposes using a$$ ten$-$year straight$-$line depreciation schedule. The plant manager estimates that the operation would require $ $32$ comma $000$ of inventory and other working capital upfront$($year $0),$ but argues that this sum can be ignored since it is recoverable at the end of the ten years. Expected proceeds from scrapping the machinery after ten years are $ $22$ comma $200.$

If the company pays tax at a rate of $20\%$ and the opportunity cost of capital is $15\%,$ what is the net present value of the decision to produce the chains$$ in$-$house instead of purchasing them from the$$ supplier?

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Part $1$

Project the annual free cash flows $($FCF$)$ of buying the chains.

The annual free cash flows for years $1$ to $10$ of buying the chains is $$$

$$

enter your response here. $($Round to the nearest dollar. Enter a free cash outflow as a negative$$ number.$)$