The following presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The unit cost of the giftware is $25.

Year Unit Sales

1 22,000

2 30,000

3 14,000

4 5,000

Thereafter 0

It is expected that net working capital will amount to 20% of sales in the following year. For example, the store will need an initial (Year 0) investment in working capital of 0.20 22,000 $40 = $176,000. Plant and equipment necessary to establish the giftware business will require an additional investment of $200,000. This investment will be depreciated straight-line over 3 years. The firms tax rate is 30%. The discount rate is 20%.

What is the net present value of the project? By how much does NPV increase if the firm takes immediate 100% bonus depreciation?