Sony International has an investment opportunity to produce a new stereo color TV. The required investment on January 1 of this year is $32 million. The firm will depreciate the investment to zero using the straight-line method. The firm is in the 34-percent tax bracket The price of the product on January 1 will be $400 per unit. That price will stay constant in real terms. Labor costs will be $15 per hour on January 1. They will increase at 2 percent per year in real terms. Energy costs will be $5 per physical unit on January 1; they will increase at 3 percent per year in real terms. The inflation rate is 5 percent. Revenues are received and costs are paid at year-end.

Â	Year 1	Year 2	Year 3	Year 4
Physical production, in units	100,000	200,000	200,000	150,000
Labor input, in hours	2,000,000	2,000,000	2,000,000	2,000,000
Energy input, physical units	200,000	200,000	200,000	200,000

The riskless nominal discount rate is 4 percent. The real discount rate for costs and revenues is 8 percent. Calculate the NPV of this project.

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