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)...

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%