Traid Winds Corporation, a firm in the 21 percent marginal tax bracket with a required rate of return or cost of capital of 14 percent, is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years and then, because this is somewhat of a fad product, be terminated. Given the information in the popup window, determine the free cash flows associated with the project, the project's net present value, the profitability index, and the internal rate of return. Apply the appropriate decision criteria.

Cost of new plant and equipment 15,000,000 Shipping and installation costs 200,000 Year units sold 1 75,000 2 120,000 3 120,000 4 85,000 5 75,000 Sales price per unit in yeras 1 through 4 360 Sales price per unit in year 5 310 Variable cost per unit 200 Annual fixed costs 750,000

a. What is the initial outlay associated with this project?

b. What is the annual free cash flow associated with this project in year 1?

What is the annual free cash flow associated with this project in year 2?

What is the annual free cash flow associated with this project in year 3?

What is the annual free cash flow associated with this project in year 4?

c. What is the terminal cash flow in year 5 (that is, what is the free cash flow in year 5 plus any additional cash flows associated with the termination of the project)?

d. What is the project's NPV given a required rate of return of 14 percent?

e. What is the project's PI given a required rate of return of 14 percent?

f. What is the project's IRR?