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 $538,000. The company estimates that it will sell 847,000 units per year for$3.03 per unit and variable non-labor costs will be $1.01 per unit. Production will end after year 3. New equipment costing$1.16 million will be required. The equipment will be depreciated using 100% bonus depreciation under the 2017 TCJA. You think the equipment will be obsolete at the end of year 3 and plan to scrap it. Your current level of working capital is $300,000. The new product will require the working capital to increase to a level of $375,000 immediately, then to $391,000 in year 1, in year 2 the level will be $341,000, and finally in year 3 the level will return to $300,000. Your tax rate is 21%. The discount rate for this project is 10.2%. Do the capital budgeting analysis for this project and calculate its NPV.

Note: Assume that the equipment is put into use in year 1

Your company has been doing wel, reaching $1.02 milion in camings, and is considering launching a new product Designing the new product has already cost $538,000. The company estimates that it wil sal 847,000 units per year for 53.03 per unit and variable non-labor costs will be 51.07 perunt. Production will end etter year 3. New equipment costing 51.16 milion will be required. The equipment will be depreciated using 100% bonus depreciation under the 2017 TCJA YOU think the quant will be obsolete at the end of year 3 and plan to sorap 2 Your current level of working capital 5300.000. The new product will require the working capital senrose to a level 5375.000 immediately then te $391,000 in year 1. in year 2 here will be $341000. and Finally in year 3 the level wreturn to $300,000. Your tax rate is 21. The discontrate for this project la 10.2% Do recaptal budgeting analysis for this project and calculate is NPK Note: Assume that the equipment is put into use in year 1. According to the bonus deprecon schedule, precio yeart will be Pound to the near for Depreciation in youn 2 and wides found to the nearest do) Complete the capitul bring you first project below Rould so enero Year Year 2 si 3 5 5 Coul foods for $ $ Oroms Pro Deprecio $ 5 . EDIT . $ Incrementalang s 5 S De . $ Working Cart 3 $ Camisen 5 Incrementale Cash Flow $ The NPV of the projects Round to the nearest color) 5 $ $ 1 1 According to the bonus depreciation schedule, depreciation in year 1 will be $ (Round to the nearest dollar.) Depreciation in years 2 and 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 Year 3 $ $ $ $ $ $ $ $ $ Sales - Cost of Goods Sold Gross Profit - Depreciation EBIT - Tax Incremental Earnings + Depreciation - Incremental Working Capital - Capital Investment Incremental Free Cash Flow $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 0 0 0 $ $ $ $ $ $ $ $ $ $ $ $ The NPV of the project is $ (Round to the nearest dollar.)