Revenues generated by a new fad product are forecast as follows:

Year Revenues

$1$ $ $45,000$

$235,000$

$325,000$

$420,000$

Thereafter $0$

Expenses are expected to be $40\%$ of revenues, and working capital required in each year is expected to be $20\%$ of revenues in the following year. The product requires an immediate investment of $$60,000$ in plant and equipment.

Required:

What is the initial investment in the product? Remember working capital.

If the plant and equipment are depreciated over $4$ years to a salvage value of zero using straight$-$line depreciation, and the firm$$s tax rate is $20\%,$ what are the project cash flows in each year?

If the opportunity cost of capital is $12\%,$ what is project NPV$?$

What is project IRR?