Tuff Wheels was getting ready to start its development project for a new product to be added to its small motorized vehicle line for children. The new product is called the Kiddy Dozer. It will look like a miniature bulldozer, complete with caterpillar tracks and a blade. Tuff Wheels has forecasted the demand and the cost to develop and produce the new Kiddy Dozer. The table below contains the relevant information for this project.

Development Cost - $1,000,000

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 - $170

Interest Rate - 8%

quarter	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16
devlp	333333.3	333333.3	333333.3
pilot			100000	100000
ramp-up			200000	200000
maktg				37500	37500	37500	37500	37500	37500	37500	37500	37500	37500	37500	37500	37500
prod/sale					1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000

Compute all cash flows as quarterly, and assume they happen at the end of the quarter. The quarterly discount rate can be taken to be 2%. For example, the first quarter development cost would be (1000000/3), and this would be divided by 1.02 to find the present value. The third quarter development cost is also the same, but it would be divided by 1.02^3 (1.02 raised to the power of 3).

Do this on a spreadsheet. What is the net present value of the project?