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You are tasked with assessing the viability of a new product. The sales team tells you to anticipate sales of 1,500 units for 3 years at a price of $20 (with the first year being year 1). However, the new product replaces an old model. You expect sales of the old model to decline by 10% per year over the previous year for the same 3 years. Last year sales in this product totaled $20,000. The new product has costs of $16/unit, and the old product has costs of 50% of sales. You expect the net effects on SG&A costs to be an increase of

2$3,000/year for the product. To manufacturethe product, you will require the purchase of a new piece of equipment. The equipment will cost $3,500. It will be depreciated for its anticipated life of 5 years using straightline depreciation with no salvage value. You expect inventory to increase by$3,000 in the first year and then decline again in year 4. One-third of this increase will be financed with accounts payable. Also at the end of year 4, the machine is sold for $1,000. What is the NPV of the project if the marginal tax rate for the firm is 32% and the cost of capital is 12%?

will give positive rating if provided in an hour