Your company has been doing well, reaching $1.00 million in earnings, and is considering launching a new product. Designing the new product has already cost $500,000. The company estimates that it will sell 800,000 units per year for $3.00 per unit and variable non-labor costs will be $1.00 per unit. Production will end after year 3. New equipment costing $1.00 million will be required. The equipment will be depreciated to zero using the 7-year MACRS schedule. You plan to sell the equipment for book value at the end of year 3. Your current level of working capital is $300,000. The new product will require the working capital to increase to a level of $380,000 immediately, then to $400,000 in year 1, in year 2 the level will be $350,000, and finally in year 3 the level will return to $300,000. Your tax rate is 21%. The discount rate for this project is 10.0%. Do the capital budgeting analysis for this project and calculate its NPV. Note: Assume that the equipment is put into use in year 1. Design already happened and is (irrelevant). (Select from the drop-down menu.) According to the 7-year MACRS schedule, depreciation in year 1 will be $ (Round to the nearest dollar.) Depreciation in year 2 will be $ (Round to the nearest dollar.) Depreciation in year 3 will be $ Complete the capital budgeting analysis for this project below: (Round to the nearest dollar.) (Round to the nearest dollar.) Year 0 Sales $ - Cost of Goods Sold Gross Profit $ - Depreciation EBIT - Tax at 21% Incremental Earnings + Depreciation EA $ EA Year 1 EA EA A EA Year 2 - Changes in NWC - Capital Expenditures Incremental Free Cash Flows $ $ $ $ EA Year 3