Tuff Wheels was preparing to begin its development project for a new product to be added to its line of small motorized vehicles for children. The new product is called Kiddy Dozer. It will look like a miniature excavator, complete with tracks and a blade. Tuff Wheels forecast the demand and cost to develop and produce the new Kiddy Dozer. The following table contains the relevant information for this project.

Development cost - $1,000,000

Estimated development time - 9 months

Pilot test - $200,000

Augmentation Cost – $400,000

Marketing and Support Cost: $150,000 per year

Sales and Production Volume - 60,000 per year

Unit cost of production - $100

Unit price - $170

Interest rate - 8%

fourth part	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	sixteen
development	333333.3	333333.3	333333.3
pilot			100000	100000
ramp up			200000	200000
doing				37500	37500	37500	37500	37500	37500	37500	37500	37500	37500	37500	37500	37500
production/sale					1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000	1050000

Calculate all cash flows as quarterly and assume they occur at the end of the quarter. The quarterly discount rate can be taken as 2%. 

For example, the first quarter development cost would be (1000000/3), and this would be divided by 1.02 to find the current value. The Q3 development cost is also the same, but would be divided by 1.02^3 (1.02 raised to the power of 3).

What is the net present value of the project?