1. The folks at Wolverine Widgets have cooked up yet another idea to speed up the manufacturing of its widgets. Their manufacturing director, Ann Arbor, has proposed a new manufacturing system with an installed cost of $240,000. This cost will be depreciated straight-line to zero over the project's four-year life, and the equipment has no salvage value. The new system will save the firm $99,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $10,000, which will be recouped at project end. If the tax rate is 21 percent, what is the cash flow from assets for each year of the project (e.g., in each of the years 0-6)?

What is the NPV of the project if the Cost of Capital is 15%?

Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6