1. What is the initial outlay associated with this project?
2. What is the annual free cash flow associated with this project in year 1?
3. What is the annual free cash flow associated with this project in year 2?
4. What is the annual free cash flow associated with this project in year 3?
5. What is the annual free cash flow associated with this project in year 4?
6. What is the terminal cash flow in year 5 (that is, what is the free cash flow in year 5 plus, any additional cash flows associated with the termination of the project)?
7. What is the project's NPV given a required rate of return of 13 percent?
8. What is the project's PI given a required rate of return of 13 percent?
9. What is the project's IRR?

(Comprehensive problem) Traid Winds Corporation, a firm in the 31 percent marginal tax bracket with a required rate of return or cost of capital of 13 percent, is considering a new project. This project involves the introduction of a new product. The project is expected to last 5 years and then, because this is somewhat of a fad product, be terminated. Given the information in the popup window, determine the free cash flows associated with the project, the project's net present value, the profitability index, and the internal rate of return. Apply the appropriate decision criteria. \begin{tabular}{|c|c|c|} \hline \multirow{8}{*}{CostofnewplantandequipmentShippingandinstallationcostsUnitsales} & \multirow{2}{*}{\multicolumn{2}{|c|}{$14,800,000}} \\ \hline & & \\ \hline & YEAR & UNITS SOLD \\ \hline & 1 & 60,000 \\ \hline & 2 & 115,000 \\ \hline & 3 & 115,000 \\ \hline & 4 & 70,000 \\ \hline & 5 & 60,000 \\ \hline Sales price per unit & \multicolumn{2}{|c|}{$360/ unit in years 1 through 4,$310/ unit in year 5} \\ \hline Variable cost per unit & \multicolumn{2}{|l|}{ \$120/unit } \\ \hline Annual fixed costs & \multicolumn{2}{|c|}{$800,000 per year in years 15} \\ \hline Working-capital requirements & \multicolumn{2}{|c|}{Therewillbeaninitialworking-capitalrequirementof$240,000justtogetproductionstarted.Foreachyear,thetotalinvestmentinnetworkingcapitalwillbeequalto15percentofthedollarvalueofsalesforthatyear.Thus,theinvestmentinworkingcapitalwillincreaseduringyears1and2,thendecreaseinyear4.Finally,allworkingcapitalisliquidatedattheterminationoftheprojectattheendofyear5.} \\ \hline Depreciation method & \multicolumn{2}{|c|}{Usethesimplifiedstraight-linemethodover5years.Assumethattheplantandequipmentwillhavenosalvagevalueafter5years.} \\ \hline \end{tabular}