You are starting a new project. This project would last 4 years. The following is the input information that you have collected: Building cost (1.3% in the first year and then 2.6% every year) $12,000,000 Equipment cost (MACRS 5 years) $8,000,000 Net operating working capital requirement (% of Sales) 10% First year sales (in units) 20,000 Growth rate in units sold 0% Sales price per unit $3,000 Variable cost per unit $2,100 Fixed costs $8,000,000 Market value of building at the end of year 4 7,500,000 Market value of equipment at the end of year 4 2,000,000 Tax rate 40% WACC 12% Inflation growth in sales price per year 2% Inflation growth in VC per unit per year 2% Inflation growth in fixed costs per year 1%

a. What is the NPV of this project? (In your calculations use zero decimal spaces/round to the whole numbers). (25 marks)

b. Explain briefly if you think that the project is viable. (5 marks)

c. Discuss the potential sources of long-term finance available to a large company. (10 marks)