Your company has been doing well, reaching $1.02 million in earnings, and is considering launching a new product. Designing the new product has already cost $548,000. The company estimates that it will sell 827,000 units per year for $2.98 per unit and variable non-labor costs will be $1.03 per unit. Production will end after year 3. New equipment costing $1.03 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 $297,000. The new product will require the working capital to increase to a level of $379,000 immediately, then to $396,000 in year 1, in year 2 the level will be $357,000, and finally in year 3 the level will return to $297,000. Your tax rate is 21%. The discount rate for this project is 9.6%. 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 $ (Round to the nearest dollar.) $ Complete the capital budgeting analysis for this project below: (Round to the nearest dollar.) Year 0 Year 1 Year 2 Sales -Cost of Goods Sold Gross Profit S $ - Depreciation 10 S S EBIT - Tax Incremental Earnings + Depreciation -Incremental Working Capital -Capital Investment Incremental Free Cash Flow 69 59 $ The NPV of the project is $ (Round to the nearest dollar.) 1 Year 3 69 $ 10