GE Power is installing a new sensor system in its factory for $50,000 which will save $40,000 per year in costly leaks of raw materials. The savings will grow by 3% each year, concurrent with production growth over the 10-year life of the sensor.

GE Power estimates a 13% cost of capital for the project and has a tax rate of 21%

The company will depreciate the sensor using the straight-line method over its 10-year life and it will have no resale value at the end of 10 years.

This project also requires an initial investment to increase the inventory of raw materials by $4000, which will stay in inventory for the life of the project, then be fully converted into cash at the end of the project (no taxes, no depreciation).

Use this information to calculate the following key pieces of information:

The CFFA in year 0 (initial investment)

CFFA in year 1

The new NPV of the entire project (including initial investment)