Year The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The unit cost of the giftware is $25. Year Unit Sales 1 22,000 2 30,000 3 14,000 4 Thereafter 5,000 0 It is expected that net working capital will amount to 20% of sales in the following year. Plant and equipment necessary to establish the giftware business will require an additional investment of $200,000. This investment will be depreciated straight-line over 3 years to a zero-salvage value although the project lasts 4 years (Hint: depreciation expense in year 4 = = 0). The firm's tax rate is 30%. The discount rate is 20%. a. What is the net present value of the project? b. How much does NPV change if the investment will be depreciated straight-line over 4 years to a $20,000 salvage value instead? Capital Investment (1) Working Capital Change in Working Capital (WC- WC1-1) (2) Operating Cash Flow Revenue NPV Template 0 1 2 3 Costs Depreciation Pre-tax Income (Revenue - Costs - Depreciation) Taxes After-tax Income (Pre-tax income - Taxes) OCF (added Depreciation) (3) Total Cash Flow (1+2+3) Present Values of Cash Flows NPV (sum of all Present Values)