(Calculating free cash flows​) At​ present, SolartechSkateboards is considering expanding its product line to include​gas-powered skateboards;​ however, it is questionable how well theywill be received by skateboarders. Although you feel there is a 70percent chance you will sell 9,000 of these per year for 10 years​(after which time this project is expected to shut down because​solar-powered skateboards will become more​ popular), you alsorecognize that there is a 15 percent chance that you will only sell4,000 and also a 15 percent chance you will sell 16,000. The gasskateboards would sell for $ 140 each and have a variable cost of​$50 each. Regardless of how many you​ sell, the annual fixed costsassociated with production would be ​$120,000. In​ addition, therewould be an initial expenditure of ​$800,000 associated with thepurchase of new production equipment. It is assumed that thisinitial expenditure will be depreciated using the simplified​straight-line method down to zero over 10 years. Because of thenumber of stores that will need​ inventory, the working capitalrequirements are the same regardless of the level of sales. Thisproject will require a​ one-time initial investment of $ 70,000 innet working​ capital, and that​ working-capital investment will berecovered when the project is shut down.​ Finally, assume that the​firm's marginal tax rate is 35 percent.

a. What is the initial outlay associated with the​ project?

b. What are the annual free cash flows associated with theproject for years 1 through 9 under each sales​ forecast? What arethe expected annual free cash flows for years 1 through​ 9?

c. What is the terminal cash flow in year 10​ (that is, what isthe free cash flow in year 10 plus any additional cash flowsassociated with the termination of the​ project)?

d. Using the expected free cash​ flows, what is the​ project'sNPV given a required rate of return of 9 ​percent? What would the​project's NPV be if 9,000 skateboards were​ sold?