Calculate the monthly payment for a loan of $9,000 with a 10% interest rate compounded monthly over a period of 5 years.

To calculate the net cash flows for each of the 4 years, we need to first calculate the annual incremental sales and costs. In the first year, incremental sales revenue would be $270,000 (1,350 units x $200 per unit x 1.03 inflation adjustment), and incremental costs would be $135,000 (1,350 units x $100 per unit x 1.03 inflation adjustment). The net cash flow for year one would be: Net cash flow = incremental sales revenue - incremental costs - depreciation - initial investment in equipment - investment in working capital Net cash flow = $270,000 - $135,000 - ($250,000 / 3) - $300,000 - ($270,000 x 0.15) = -$153,750 In subsequent years, the incremental sales and costs increase due to inflation. Using the same formula for each year, we get the following net cash flows: Year 2: -$90,112.50 Year 3: $16,737.50 Year 4: $123,475 To estimate the required net working capital for each year, we take 15% of the annual incremental sales revenue. The cash flow due to investments in net working capital is the change in net working capital from one year to the next. So, for each year: Required net working capital = 15% of incremental sales revenue Change in net working capital = required net working capital for current year - required net working capital for previous year Year 1: Required net working capital = 15% x $270,000 = $40,500 Cash flow due to investments in net working capital = $40,500 - $0 = $40,500 Year 2: Required net working capital = 15% x ($270,000 x 1.03) = $41,545.50 Cash flow due to investments in net working capital = $41,545.50 - $40,500 = $1,045.50 Year 3: Required net working capital = 15% x ($270,000 x 1.03^2) = $42,606.94 Cash flow due to investments in net working capital = $42,606.94 - $41,545.50 = $1,061.44 Year 4: Required net working capital = 15% x ($270,000 x 1.03^3) = $43,684.77 Cash flow due to investments in net working capital = $43,684.77 - $42,606.94 = $1,077.83 In summary, the net cash flows for each of the 4 years are: -$153,750, -$90,112.50, $16,737.50, and $123,475. The required net working capital and cash flow due to investments in net working capital increase each year due to inflation and the growth of the new product line. It's important to consider these additional costs and investments when evaluating the profitability of the new line.