You are financial managers of a company that produces printers. Currently, you are using NPV method to evaluate a 10-year project that will produce a new model. The WACC is 10% and the tax rate is 21%.

• The project needs a set of machines that are worth $5 million. The company uses a 10-year straight-line depreciation method so that 100% of fixed assets will be depreciated by year 10. The fixed asset can be sold for $0.5 million at the end of year 10.
• In the past two years, the company spent $800,000 in R&D to develop the new model.
• The project will be partially financed with debt, and the interest to be paid every year would be $100,000.
• If the new project is taken, it is expected that the current inventory level will increase by $1,500,000, account receivable will increase by $1 million, account payable increases by $800,000, and the minimum cash balance will increase by $0.5 million.
• The net sales from this project will be $8 million per year, of which 20 percent will be from the lost sales of existing products. The variable costs of the production will be 30% of the net sales.
• The project will require hiring a new manager, who will cost $100,000 per year. In addition, the firm needs to rent a new office for $50,000 a year.
• Currently, the overhead of the firm is $500,000. And the accounting department will allocate 20% of this amount to the new project.

Question 1: How much is the initial investment at t=0?

1. 6,700,000
2. 7,200,000
3. 8,800,000
4. 7,500,000
5. 8,000,000

Question 2: How much is the operating cash flow for the first year?

1. 3,265,000
2. 3,225,500
3. 2,765,000
4. 2,646,500
5. 3,146,500

Question 3: How much is the non-operating cash flow at the end of the last year?

1. 2,801,500
2. 2,900,000
3. 1,800,000
4. 2,437,000
5. 2,200,000

Question 4: How much is the NPV?

1. 12,982,143
2. 13,352,778
3. 12,905,525
4. 12,151,943
5. 13,073,449

Specifically looking for the answer to question 2, so that I can find the answer to question 4, thank you.