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 in Class 8 with a depreciation rate of 20%. 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.

Part 1

What are the initial cash flows? Answer in millions of dollars and round to the nearest million.

Part 2

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.

Part 3

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.

Part 4

What is the NPV of the project? Answer in millions of dollars and round to the nearest million.