t, you have just been offered a big production contract by a new client. The contract will add $200,000 to your revenues for each of the next five years and it will cost you S100,000 per year to make After spending $10,000 on the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreclated, but could be sold for $50,000 now. If you use it in the project, it will be worthless at the end of the project. You will buy new equipment valued at $30,000 and use the 5-year MACRS schedule to depreciate it. It will be worthless at the end of the project. Your current production manager earns $80,000 per year. Since she is busy with ongoing projects, you are planning to hire an assistant at $40,000 per year to help with the expansion. You will have to immedi ately increase your inventory from $20,000 to $30,000. It will return to S20,000 at the end of the project. Your company's tax rate is 35% and your discount rate is 15%, what is the NPV of the contract? Note: Assume that the equipment is put into use in year 1 Calculate the free cash flows below: Round to the nearest dollar.) Year 0 Year 1 Year 2 Sales Cost of Goods Sold Gross Profit Annual Cost EBIT Tax Incremental Earnings Incremental Working Capital Opportunity Cost Capital Investment Incremental Free Cash Floww