The Freeman Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 40 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

Investment $ 26,000

Sales revenue: yr1 $13,500, yr2 $ 14,000, yr3 $ 14,500, yr4 $ 11,500

Operating costs yr1 $2,900, yr2 $3,000 yr3 $3,100, yr4 $2,300

Depreciation yr1 $6,500, yr2 $6,500, yr3 $6,500, yr4 $6,500

Net working capital spending yr0 $320, yr1 $370, yr2 $420, yr3 $320, yr4 ?

a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)

Net Income Year 1:

Net Income Year 2:

Net Income Year 3:

Net Income Year 4:

b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Cash Flow Year 0:

Cash Flow Year 1:

Cash Flow Year 2:

Cash Flow Year 3:

Cash Flow Year 4:

c. Suppose the appropriate discount rate is 11 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV $