You have been hired as a consultant for ABC, Inc., manufacturers of fine zithers. The market for fine zithers is growing quickly. The company bought some land three years ago for $940,000 in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $740,000 on an aftertax basis. At the end of the project the land could be sold for $940,000 on an aftertax basis. The company also hired a marketing firm to analyze the zither market, at a cost of$135,000. An excerpt of the marketing report is as follows:

The zither industry will have a rapid expansion in the next four years. With the brand name recognition that ABC, Inc brings to bear, we feel that the comapnay will be able to sell 3,080, 3,740, 2640, and 1,900 units each year for the next four years, respectively. Again, capitalizing on the name recognition of ABC, Inc., we feel that a premium price of $710 can be charged for each zither. Since zithers appear to be a fad, we feel at the end of the four-year period, sales should be discounted.

ABC, Inc. feels that fixed costs for the project will be $350,000 per year, and variable costs are 16 percent of sales. The equipment necessary for production will cost $3,900,000 and will be depreciated according to a three-year MACRS schedule (MACRS Table). At the end of the project, the equipment can be scraped for $390,000. Net working capital of $100,000 will be required immediately and will be recaptured at the end of the project. ABC, Inc. has a 37 percent tax rate and the required return on the project is 14 percent. Assume the company has other profitable projects.

Calculate the aftertax salvage value $_________________

Calculate the operating cash flow for each year.

CASH FLOW

Year 1 $____________

Year 2 $____________

Year 3 $____________

Year 4 $____________

What is the NPV of the project? $_______________ (round answer to 2 decimal places