Your company has been doing well, reaching $1.15 million in earnings, and is considering launching a new product. Designing the new product has already cost $549,000. The company estimates that it will sell 776,000 units per year for$3.04 per unit and variable non-labor costs will be $1.09 per unit. Production will end after year 3. New equipment costing$1.18 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 $308,000. The new product will require the working capital to increase to a level of $373,000 immediately, then to $392,000 in year 1, in year 2 the level will be $349,000, and finally in year 3 the level will return to $308,000. Your tax rate is 21%. The discount rate for this project is 9.5%. Do the capital budgeting analysis for this project and calculate its NPV. Note: Assume that the equipment is put into use in year 1.

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Your company has been doing well, reaching $1.15 million in earnings, and is considering launching a new product. Designing the new product has already cost $549,000. The company estimates that it will sell 776,000 units per year for $3.04 per unit and variable non-labor costs will be $1.09 per unit. Production will end after year 3. New equipment costing $1.18 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 $308,000. The new product will require the working capital to increase to a level of $373,000 immediately, then to $392,000 in year 1, in year 2 the level will be $349,000, and finally in year 3 the level will return to $308,000. Your tax rate is 21%. The discount rate for this project is 9.5%. 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 fixed (irrelevant). (Select from the drop-down menu.) According to the bonus depreciation schedule, depreciation in year 1 will be $ 1180000. (Round to the nearest dollar.) Depreciation in years 2 and 3 will be $0). (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 $ $ 2359040 2359040 $ 2359040 - Cost of Goods Sold $ $ (1513200) $ 1513200 $ 1513200 Gross Profit $ $ 845840 $ 845840 $ 845840 - Depreciation $ $ (1180000) $ $ EBIT $ $ (334160) $ $ - Tax $ $ $ $ Incremental Earnings $ $ $ $ $ $ $ $ + Depreciation - Incremental Working Capital $ $ $ $ - Capital Investment $ $ $ $ Incremental Free Cash Flow $ $ $ $ The NPV of the project is $ 0. (Round to the nearest dollar.)