help with a - d

{Calculating 'ea cash ows) At present, Solartech Skateboards is considering expanding its product line to include gaspowered skateboards; however, it is questionable how well they will be received by skateboarders. Although you feel there is a 50 percent chance you will sell 11,000 of these per year for 10 years {after which time this project is expected to shut down because solarpowered skateboards will become more popular}? you also recognize that there is a 25 percent chance that you wil only sell 5,000 and also a 25 percent chance you will sell 1?,000. The gas skateboards would sel for $100 each and have a variable cost of $40 each. Regardless of how many you sell, the annual xed costs associated with production would be $11Dr000. In addition, there would be an initial expenditure of $500,000 associated with the purchase of new production equipment which will be depreciated using the bonus depreciation method in year 1. Because of the number of stores that will need inventory, the working capital requirements are the same regardless of the level of sales. This project will require a onetime initial investment of $70r000 in net working capital, and workingcapital investment wil be recovered when the project is shutdown. Finally, assume that the rm's marginal tax rate is 24 percent. a. What is the initial outlay associated with the project? b. What are the annual free cash flows associated with the project for years 1, and 2 through 9 under each sales forecast? What are the expected annual free cash flows for year 1, and years 2 through 9? c. What is the terminal cash flow in year 10 (that is, what is the free cash flow in year 10 plus any additional cash flows associated with the termination of the project)? d. Using the expected free cash flows, what is the project's APV given a required rate of return of 8 percent? What would the project's /PV be if 11,000 skateboards were sold