The Sturgeon Corp. 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 $2.8 million plus $340,000 for installation and delivery. The equipment falls into the MACRS 7-year class. The equipment will be scrapped when the project is finished in 5 years for an estimated $700,000. Sturgeon estimates that sales in the first year of production will be 110,000 units at $30 apiece. Due to intense marketing and word-of-mouth advertising, they believe sales will increase by 50% in the second year. Sales are estimated to grow at 10% in the third year. Sales in year 4 and 5 will be the same as in year 3. Variable production costs will be 65% of sales. Fixed costs will be $250,000 in year 1, and will increase at 4% per year. The sales price of the spinning reel is estimated to increase at 4% per year over the life of the project also. Net operating working capital requirements will be 6% of sales. If Sturgeon is in the 40% tax bracket, what will be the cash flows for each year of this project (don't forget time 0 and the extra terminal year cash flows) Also calculate the NPV assuming Sturgeon has a 12% cost of capital Should Sturgeon Accept the project?