You are financial managers of a company that produces printers. You will use NPV method to evaluate a $10-$year project that produce and sell a new model. The WACC is $5\%$ and the tax rate is $21\%.$

$$ The project needs a set of machines that costs $$5$ million. The company uses a $10-$year straight$-$line depreciation method so that $100\%$ of fixed assets will be depreciated by year $10.$ There is no salvage value of the fixed asset.

$$ In the past two years, the company had spent $$800,000$ in R&D to develop the new model.

$$ The project will be partially financed with debt, and the interest to be paid every year would be $$200,000.$

$$ If the new project is taken, it is expected that the investments in inventory will increase by $$1,500,000,$ account receivable will increase by $$1,500,000,$ account payable increases by $$600,000,$ accruals decreases by $$100,000.$ Suppose these changes will reverse at the end of the project.

$$ The net sales from this project will be $$8$ million per year, of which $20$ percent will be from the lost sales of existing products. The costs of the production will be $45\%$ 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 total initial investment at t$=0?$

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

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

Question $4$: How much is the NPV of the project?