Your firm is planning to launch a new product and it will generate related annual sales of $1,210,000 with annual variable cost $244,000 for 4 years. The additional fixed cost is $122,000 each year. Your firm will have to add a new production line and it requires an initial investment cost of $1,210,000 now. The new production line will be depreciated using a straight line method to zero at the end of the project. The pretax market value of the new production line will be worth $106,500 at

the end of the project. The project requires an initial net working capital of $55,000 and during years 1 to 4 the net working capital remains 10 percent of annual sales. Tax rate is 21 percent and the weighted average cost of capital is 10%. a) Calculate Operating Cash Flow for years 1-4. b) Find NPV. Should the firm accept the project?