Q3. (25 marks) A project requires an initial fixed asset investment of $600,000, which will be depreciated straight line to zero over the six-year life of the project. The pre-tax salvage value of the fixed assets at the end of the project is estimated to be $50,001. Projected sales volume for each year of the project is shown below. The sale price is $50 per unit for the first three years, and $45 per unit for years 4 through 1. A $30,000 initial investment in net working capital is required, with additional investments equal to 75% of annual sales for each year of the project. Variable costs are $35 per unit, and fixed costs are $50,000 per year. The firm has a tax rate of 34% and a required retum on investment of 12% Year Sales 3 15,625 10,000 12,500 19531 24.414 30.518 Calculate NPV by showing detailed calculations O 17 hp ID & A % 5 0) 8 O a 2 3 VA