Now, identify and calculate the cash flows from operations. $($Use parentheses or a minus sign for cash outflows.$)$

Now, identify and calculate the cash flows from the terminal disposal of investment.

Additional information

The manager estimates that the expansion of the business will require an

investment in working capital of $$43,000.$ Because the company already has

a facility, there would be no additional rent or purchase costs for a building, but the

project would generate an additional $$390,000$ in annual cash overhead. Moreover,

the manager expects annual materials cash costs for bicycle parts to be

$$1,720,000,$ and labour for the bicycle parts to be about the same as the labour

cash costs for furniture parts.

The Controller of Metal, working with various managers, estimates that the

expansion would require the purchase of equipment with a $$4,850,000$ cost and an

expected disposal value of $$460,000$ at the end of its $10-$year useful life.

Depreciation would occur on a straight$-$line basis.

The CFO of Metal determines the firm's cost of capital as $8\%.$ The CFO's salary is

$$420,000$ per year. Adding another division will not change that. The CEO asks for

a report on expected revenue for the project and is told by the marketing

department that it might be able to achieve cash revenue of $$3,700,000$ annually

from bicycle parts. Metal Manufacturing has a tax rate of $35\%.$ The CCA rate is

$25\%.$

Now, identify the cash flows that are not relevant to the capital budgeting of this situation. $($Select all that apply.$)$

A$.$ The investment in the furniture parts division

B$.$ Costs of the furniture parts division except for direct labour

C$.$ Increase in cash overhead costs

D$.$ The revenues in the furniture parts division

E$.$ Direct labour costs of the furniture parts division

F$.$ CFO salary

Requirement $2.$ Calculate the net present value $($NPV$)$ of the expansion project and comment on your analysis.

First, calculate the NPV of the expansion project. $($Round your answer to the nearest whole dollar. Use parentheses or a minus sign for a negative NPV$.)$

$NPV=$$