This is the only info I got fot this problem. this is problem no. 1: Parker products manufactures a variety of household products. The company is considering introducing a new detergent. The companys CFO has collected the following information about the proposed product.

The product has a proposed life of 4 years.

You will have to purchase a new machine to produce the detergent. The machine will have an upfront cost of $2 million.

The machine would be depreciated on a straight line basis.

The company anticipates that the machine will last 4 years and after the 4^th year, its salvage value will be equal to $0.

If the company goes ahead with the proposed product, it will have an effect on the net working capital. At the onset (t = 0), inventory will increase by $140000 and payables will increase by $40000 so increase in net working capital would be $100,000.

On year 4, the net operating working capital will be recovered, after the project is completed.

The detergent is expected to generate sales revenue of $1 million in the 1^st year, $2 million in the 2^nd year, $2 million in the 3^rd year and $1 million in the 4^th year.

Each year the operating cost amounts to $400,000.

Tax rate is 40%.

The projects WACC is estimated to be 12%. Calculate if the new detergent should be introduced.

	0	1	2	3	4
Sales
Operating costs
Earnings Before Interest, Tax & Depreciation
Depreciation
Earnings Before Interest and Tax
TAX
Net Operating Profit After Tax
Add: depreciation
Salvage value
Less: tax on excess market price
Equipment
Increase in Net Working Capital
Incremental cash flow