You have just been hired as a consultan budgeting process. The company below. The project is estimated to e and will be fully depreciated by the straight-line me 4) the company estimates that 12% of forecasted sales. Re depreciation) are expected to a consultant to a local manufacturing company to help them with their capital company is considering a new project, the data for which are described and shown sumated to be a 4-year proiect. The equipment that will be used has a 10-year tax y depreciated by the straight-line method over 10 years. At the end of the project (year stimates that it can sell the equipment for $500,000. Working capital requirements will be isted sales. Revenues in year 1 are expected to be $1,500,000 and operating costs (excluding n) are expected to be 55% of sales. Real growth (i.e. excluding inflation) in sales and operating expected to be 3% after year 1. However, inflation effects will need to be accounted for. You also know that your firm has pub know that your firm has public debt outstanding. Specifically, they have 5.5 percent semi-annual coupon bonds outstanding that mature in 10 years ($1.000 face value). The bonds currently sell in the arket for $1015. The company's levered beta is 1.25 at the current capital structure of 70% equity and Jeot (market values). However, the company plans to recapitalize the company to reach its target capital structure of 60% equity and 40% debt (market values). The yield on a 2-year Treasury note is 2.49% and the yield on a 10-year Treasury note is 2.95%. The YTD return on the S&P 500 is -0.76% but going Torward, analysts expect the returns to be closer their 10-year average of 7.79%. What is the project's NPV? (20 pts) Net investment in equipment (depreciable basis) Required working capital % Sales Year 1 Sales revenues, (estimated) Year 1 Operating costs, excluding depreciation (55% of sales - estimated) Expected pretax salvage value Expected inflation rate Tax rate $2,000,000 12% $1,500,000 $825,000 $500,000 2% 35%