Tuff Wheels has forecast the demand and the cost project for a new product to be added to its small motorized vehicle line for children. The new product is called the

Kiddy Dozer. It will look like a miniature bulldozer, complete with caterpillar tracks and a blade. Tuff Wheels has forecasted the demand and the cost to develop and produce the new Kiddy Dozer. The following table contains the relevant information for this project. $750,000 $200,000 $400,000 Development cost Estimated development time Pilot testing Ramp-up cost Marketing and support cost $150,000 per year Sales and production volume 60,000 per year Unit production cost $100 Unit price $155 8% Interest rate Tuff Wheels also has provided the project plan shown as follows. As can be seen in the project plan, the company thinks that the product life will be three years until a new product must be created. Project Schedule Kiddy Dozer Development Pilot testing 9 months Ramp-up Marketing and support Production and sales Year 1 Year 2 Year 3 Year 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4/nAssume all cash flows occur at the end of each period. a. What are the yearly cash flows and their present value (discounted at 8 percent) of this project? What is the net present value? Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate calculations. Round your answer to the nearest thousand. b. What is the impact on NPV for the Kiddy Dozer if the actual sales are 50,000 per year? 70,000 per year? Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate calculations. Round your answer to the nearest thousand. c. Based on the original sales level of 60,000, what is the effect on NPV caused by changing the discount rate to 9%, 10%, or 11%? Note: Enter your answer in thousands of dollars. Perform all calculations using Excel. Do not round any intermediate calculations. Round your answer to the nearest thousand.