You have been hired as a capital budgeting analyst by a sporting goods firm that

manufactures athletic shoes and has captured $10\%$ of the overall shoe market $($the total

market is worth $$100$ million a year$).$ The fixed costs associated with manufacturing these

shoes is $$2$ million a year, and variable costs are $40\%$ of revenues. The company's tax rate

is $40\%.$

The firm believes that it can increase its market share to $20\%$ by investing $$10$ million in a

new distribution system $($which can be depreciated over the system's life of $10$ years to a

salvage value of zero$)$ and spending $$1$ million a year in additional advertising. The company

proposes to continue to maintain working capital at $10\%$ of annual revenues. The discount

rate to be used for this project is $8\%.$

a$.$ What is the initial investment for this project?

b$.$ What is the annual operating cashflow from this project?

c$.$ What is the NPV of this project?