The Asian Carp Corp. (ACC) has developed a new line of spinning reel it plans to produce and sell in the United States. The cost of the necessary...

The Asian Carp Corp. (ACC) has developed a new line of spinning reel it plans to produce and sell in the United States. The cost of the necessary equipment will be $5.3 million plus $500,000 for installation and delivery. The equipment falls into the MACRS 5-year class. The equipment will be scrapped when the project is finished in 5 years for an estimated $500,000. ACC estimates that sales in the first year of production will be 180,000 units at $30 apiece. Due to intense marketing and word-of-mouth advertising, they believe sales will increase by 40% in the second year. Sales are estimated to grow at 10% in the third year. Sales in year 4 and year 5 will be the same as in year 3. ACC plans to discontinue the production of this reel at the end of the fifth year. Production costs will be 70% of sales. The sales price of the spinning reel is estimated to increase at 4% per year over the life of the project. Net operating working capital requirements will be 5% of the increase in sales in the following year. If ACC is in the 40% tax bracket, what will be the net cash flows for each year of this project? Don’t forget the time 0 cash flow.