The Fancy Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 22 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

a. Compute the incremental net income of the investment for each year.
b. Compute the incremental cash flows of the investment for each year.
c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?

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Investment Sales revenue Operating costs Depreciation Net working capital spending Year 0 $32,400 350 Year 1 $14,900 3,200 8,100 220 Year 2 $16,300 3,400 8,100 250 Year 3 $17,800 4,500 8,100 150 Year 4 $13,700 3,100 8,100 ?