5: Problem 12-13 (Calculating project cash flows and NPV) As part of its planning for the coming Christmas season, Criswell Motorsports is considering whether to expand its product line, which currently consists of skateboards, to include petrol-powered skateboards. The company feels that it can sell 2000 of these per year for 10 years (after which time this project is expected to shut down, with solar-powered skateboards taking over). Each petrol-powered skateboard would have variable costs of $40 and would sell for $200; annual fixed costs associated with production would be $160 000. In addition, there would be a $450 000 initial expenditure associated with the purchase of new production equipment. It is assumed that this initial expenditure will be depreciated using the simplified straight-line method down to zero over 10 years. The project will also require a one- time initial investment of $50 000 in net working capital associated with inventory, and this working capital investment will be recovered when the project is shut down. Finally, assume that the firm's tax rate is 30%. (a) What is the initial cash outlay associated with this project? (b) What are the annual net cash flows associated with this project for years 1 to 9? (c) What is the terminal cash flow in year 10 (i.e. what is the free cash flow in year 10 plus any additional cash flows associated with termination of the project)? (d) What is the project's NPV given a 10% required rate of return? (e) A