The Tuff Whee's was getting resdy to start its development project for a new product to be added to its amsll motorized vehicle line for

children. The new product is caled the Kiddy Dozer. It will look the s minlsture bulldozer, complete wath caterpillse trscks snd s blsole.

Tuff Wheels has forecssted the demand and the coat to develop and produce the new Kiddy Dozer. The following tsble contalns the

relevsnt Informstion for thls project.

Development cost $ $1,200,000$

Estimated development time $9$ months

Pilot testing $ $200,000$

Ramp$-$up cost $ $400,000$

Marketing and support cost $ $150,000$ per year

Sales and production volume $60,000$ per year

Unit production cost $ $100$

Unit price $ $200$

Interest rate $8\%$

Tuff Wheels also has provided the project plsn shawn sa follows. As can be seen in the project plon, the compsny thinks that the

product life will be three years until o new product must be created.

Aasume sil cash flows occur st the end of esch period.

a$.$ What is the net present value $($d$)$scounted at $9\%)$ of this project? Consider al coats and expected revenues. $($Enter your answer in

thousands of dollars. Perform all calculations using Excel. Do not raund any intermediste calculations. Round your answer to the

nearest thousand.$)$

Nat prosent

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b$.$ What is the impoct on NPV for the Kiddy Dozer if the sctusl as es se $50,000$ per year? $70,000$ per year? $($Enter your onswer In

thousands of dollars. Perform all calculations using Excel. Do not raund any intermediste calculations. Round your answer to the

nearest thousend.$)$

c$.$ Bsaed on the originsl ssles level of $60,000,$ what is the effect on NPV coused by chsinging the diacount rate to $9\%,10\%,$ or

$11\%?($Enter your answer In thousands of dollars. Perform all calculations using Excel. Do not round any lintermediate calculations.

Round your answer to the nearest thousand.$)$