The Janes Corporation, a firm in the 30 percent marginal tax bracket rate, is considering a new project. This project involves the introduction of a new product. This project is expected to last Eight years and will be terminated. Given the following information, determine the net cash flows associated with the project, the projects net present value, the profitability index, and the internal rate of return. Apply the appropriate decision criteria.

1. Cost of new plant and equipment: $11,825,000
2. Shipping and installation costs: $170,000
3. Unit sales over the eight years will begin at 95,000 units and grow at 10.5% for the first 3 years, 3.5% for the next 3 years and will not grow into the eighth year.
4. Sales price per unit: $330/unit in Years 14, $275/unit in Year 5, 6 and 7 and $205 for year 8
5. Variable cost per unit: $218.00/unit for the first 3 years and $195/ unit thereafter
6. Annual fixed costs: $780,000 for the first 4 years and $975,000 thereafter, due to increased maintenance expenses.
7. Working capital requirements: There will be an initial working capital requirement of $955,000 just to get production started. Finally, all working capital is liquidated at the termination of the project at the end of Year 8.
8. The depreciation method: MACRS 5 Years. It is assumed that the plant and equipment will have no salvage value after eight years.

The capital structure of the company is presented in Table I below.

Source of Capital	Market Value
Bonds	$4,000,000
Preferred stock	$2,000,000
Common stock	$6,000,000