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1. You are working with a consumer product company on estimating the expected cash flows from a new brand of toothpaste that they plan to introduce. From your prior experiences with earlier introductions of similar products, you have collected the following information: - You are likely to sell 8 million tubes in the first year that you introduce the project, 10 million in the second year, 12 million in the third year and back down to 8 million in the fourth year. At the end of the fourth year, you will have to replace the brand with a new one. - You price toothpaste at $3 a tube currently, and expect to increase prices at 5% a year for the next 4 years. - You will have to advertise most heavily in the first year, spending $10 million on advertising, but you expect this to drop to $6 million in year 2,$4 million in year 3 and $2 million in year 4 . - Your costs associated with producing the toothpaste are $0.50 a tube currently, and you expect this to increase at 5% a year for the next 4 years. - You will have to invest $10 million in new equipment at an old plant to create the manufacturing facilities and you expect to depreciate this expenditure straight line over the 4 years down to zero. - You have a 40% tax rate. - The firm's weighted average cost of capital is 12%. This is the required return on the project. What is the NPV

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