The managers of Pinocchio Auto Parts, Inc. are planning to manufacture engine blocks for wooden classic cars from the 1900s era. They expect to sell 250 blocks at $6,000 each annually for the next five years. The necessary foundry and machining equipment will cost a total of $800,000 and belongs in a 30% CCA class for tax purposes. The firm expects to be able to dispose of the manufacturing equipment for $150,000 at the end of the project. Labour and materials costs total $500 per engine block, fixed costs are $125,000 per year. The project will see an increase in accounts payable of $20,000, an increase in accounts receivable of $40,000 and an increase in the raw material inventory of $25,000. The company will use some of the existing machinery from the on-going business that has a value of $20,000. Pinocchio has a 35% tax rate and a 12% required rate of return.

How much is the initial investment?

How much change in the net working capital