Tarzan and Jane are planning to start a clothing store chain. They expect to run the business for three years. Here are some initial estimates. Year 1 Year 2 Year 3 Year 0 -$500,000 $400,000 S500,000 $150,000 $800,000 $460,000 $150,000 $800,000 S460,000 $150,000 Capital Investment Revenues Costs Depreciation Taxable Income (Loss) Taxes (21% Tax Rate) NOPAT Adjustment #1 Change in Net Working Capital Adjustment #2 Capital Disposal Adjustment #3 Cash Flows $100,000 -$100,000 $80,000 Fill in the rows Taxable Income (Loss), Taxes (21% Tax Rate), and NOPAT. Also fill in the row Adjustment #1 with depreciation adjustment to cash flows. The net working capital is going to increase by $100,000 in the first year, and then decrease by $100,000 at the end of the project (as shown in the table). Use row Adjustment #2 for the impact of the changes in net working capital on cash flows. Tarzan and Jane expect to sell the equipment for $80,000 at the end of year 3. Find out the net cash from this transaction, and record this amount in the row labeled Adjustment #3. Use NOPAT and Adjustments #1, #2, and #3 to fill in the Cash Flows. Given the project's risk, they have determined that the project has a beta of 2. The project is all equity financed. If the expected return on the market is 9%, and the risk-free rate is 3%, what is the appropriate discount rate for the project? What is the project's NPV? What is the project's IRR? Required Return: NPV: IRR: 2