The "Toy World" is a leading producer of toys. The firm is considering a new line of product - the "Inside Out" toy set. The firm plans on a 3-year production. The firm will pay $70 to conduct the market analysis and determine the extent of customer demand for the new toy line. The new toy line will be produced in a building owned by the firm and located near Los Angeles. The building is currently leased out to another firm for $50 per year. The firm will buy new equipment to produce the new toy. The purchase price of the new equipment is $900, the shipping cost is $20, and the modification cost is $80. The new equipment follows a 5-year MACRS schedule. The estimated salvage value of this equipment is $250 at the end of project. The firm is expected to sell 350 units of new toy each year. The unit price is expected to be $12. There will be two types of non-depreciation operating costs: the total variable costs are expected to be 70% of sales and the fixed costs are expected to be $500 each year.

The working capital is expected to increase by $600 immediately at year 0, with the beginning working capital being zero. For year 1 and year 2, working capital will be equal to 10% of next year's sales revenue. At the end of the project, all working capital will be liquidated.

The company adopts the "subjective approach" to estimate the project WACC. The firm WACC is 6% and the "subjective" factor to adjust for the risk level of project is 2%. This new project is classified as "high risk" project. The corporate tax rate is 21%. 

(Q) Estimate Project CFs and Calculate NPV.