Your company has been doingwell, reaching $1.02million inearnings, and is considering launching a new product. Designing the new product has already cost $531,000.The company estimates that it will sell 792,000units per year for$3.01per unit and variablenon-labor costs will be $ 1.07per unit. Production will end after year 3. New equipment costing $1.05million will be required. The equipment will be depreciated to zero using the7-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 $301,000.

The new product will require the working capital to increase to a level of $384,000

immediately, then to $393,000

in year1,$351,000

in year2, and finally return to$301,000.

Your tax rate is 35 %.

The discount rate for this project is 10.1 %.

Do the capital budgeting analysis for this project and calculate its NPV.