$($Related to Checkpoint $12\mathrm{.}1)($Calculating project cash flows

and NPV$)$ You are considering expanding your product line that currently

consists of skateboards to include gas$-$powered skateboards, and you feel

you can sell $9,000$ of these per year for $10$ years $($after which time this

project is expected to shut down with solar$-$powered skateboards

taking over$).$ The gas skateboards would sell for $$70$ each with variable

costs of $$25$ for each one produced, and annual fixed costs associated

with production would be $$150,000.$ In addition, there would be a

$$1,200,000$ initial expenditure associated with the purchase of new

production equipment. It is assumed that this initial expenditure will be

depreciated using the simplified straight$-$line method down to zero over $10$

years. The project will also require a one$-$time initial investment of

$$60,000$ in net working capital associated with inventory, and this working

capital investment will be recovered when the project is shut down.

Finally, assume that the firm's marginal tax rate is $33$ percent.

a$.$ What is the initial cash outlay associated with this project?

b$.$ What are the annual net cash flows associated with this project for

years $1$ through $9?$

c$.$ What is the terminal cash flow in year $10($that is$,$ what is the free cash

flow in year $10$ plus any additional cash flows associated with termination

of the project$)?$

d$.$ What is the project's NPV given a required rate of return of $13$ percent?

a$.$ The initial cash outlay associated with this project is $$1260000.$

$($Round to the nearest dollar.$)$

b$.$ The annual net cash flows associated with this project for years $1$

through $9$ are $

$($Round to the nearest dollar.$)$