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Your company has been doing well, reaching $1.09 million in earnings, and is considering launching a new product. Designing the new product has already cost $516,000. The company estimates that it will sell 750,000 units per year for $2.99 per unit and variable non-labor costs will be $1.01 per unit. Production will end after year 3. New equipment costing $1.11 million will be required. The equipment will be depreciated to zero using the 7-year MACRS schedule. You plan to sell the equipment for book value at the end of year 3. Your current level of working capital is $310,000. The new product will require the working capital to increase to a level of $374,000 immediately, then to $395,000 in year 1, $343,000 in year 2, and finally return to $310,000. Your tax rate is 35%. The discount rate for this project is 9.7%. Do the capital budgeting analysis for this project and calculate its NPV.

Your company has been doing well, reaching $1.09 million in earnings, and is considering launching a new product. Designing the new product has already cost $516, 000. The co variable non-labor costs will be $1.01 per unit. Production will end after year 3. New equipment costing $1.11 million will be required. The equipment will be depreciated to zero usi value at the end of year 3. Your current level of working capital is $310.000. The new product will require the working capital to increase to a level of $374.000 immediately, then to tax rate is 35%. The discount rate for this project is 9.7%. Do the capital budgeting analysis for this project and calculate its NPV. Complete the capital budgeting analysis for this project below: (Round to the nearest dollar.)