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Sleep Comfort Corp. is considering a new product: the Ejector Bed. The Ejector Bed allows either person (left or right) to eject the other person

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Sleep Comfort Corp. is considering a new product: the Ejector Bed. The Ejector Bed allows either person (left or right) to eject the other person off of the bed at the touch of a button. The production equipment and facilities will cost $500 million. The production equipment is 10-year property with depreciation rates of 10% and 18% in the first two years. The project will last two years by which time the equipment and facilities will be sold for $150 million. Earnings before interest, taxes and depreciation is forecast to be $400 million in both years. The project will require an increase in net working capital of $25 million, which will be liquidated at the end of year two. The company's cost of capital is 9% and the marginal tax rate is 35%. Answer the following questions, What are the initial cash flows? (Answer in millions of dollars and round to the nearest million.) $ 525 XM What are the operating cash flows in Year 1 (including the depreciation tax shield)? (Answer in millions of dollars and round to the nearest million.) S|321. X M What are the terminal cash flows (including the depreciation tax shield and tax on sale)? (Answer in millions of dollars and round to the nearest million.) $ 443 XM What is the NPV of the project? (Answer in millions of dollars and round to the nearest million) s 187 X M

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