Tuff Wheels has forecast the demand and the cost project for a new product to be added to its small motorized vehicle line for children. The new product is called the Kiddy Dozer. It will look like a miniature bulldozer, complete with caterpillar tracks and a blade. Tuff Wheels has forecasted the demand and the cost to develop and produce the new Kiddy Dozer. The following table contains the relevant information for this project.

Development cost

Estimated development time

Pilot testing

Ramp$-$up cost

Marketing and support cost

Sales and production volume

Unit production cost

Unit price

Interest rate

$$1,250,000$

$9$ months

$$200,000$

$$400,000$

$$150,000$ per year

$60,000$ per year

$$100$

$$205$

$8\%$

Tuff Wheels also has provided the project plan shown as follows. As can be seen in the project plan, the company thinks that the product life will be three years until a new product must be created.

Project Scr

Kiddy Doz

Developm

Pilot testins

Ramp$-$up

Marketing a

support

Production

sales

Assume all cash flows occur at the end of each period.

a$.$ What are the yearly cash flows and their present value $($discounted at $8$ percent$)$ of this project? What is the net present value?

Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate calculations. Round your answer to the nearest thousand.

Net present value