(Related to Checkpoint 11.1) (Net present value calculation) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $\$ 4,000,000$ and would generate annual net cash inflows of $\$ 900,000$ per year for 7 years. Calculate the project's NPV using a discount rate of 8 percent.

If the discount rate is 8 percent, then the project's NPV is $\$ \square$. (Round to the nearest dollar.)

Step 1 ：Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $4,000,000 and would generate annual net cash inflows of $900,000 per year for 7 years. We are asked to calculate the project's NPV using a discount rate of 8 percent.

Step 2 ：The Net Present Value (NPV) is a measure of the profitability of a project. It is calculated by subtracting the initial investment from the present value of the future cash inflows. The present value of future cash inflows is calculated by discounting the future cash inflows at the given discount rate.

Step 3 ：In this case, the initial investment is $4,000,000, the annual net cash inflow is $900,000, the project duration is 7 years, and the discount rate is 8 percent.

Step 4 ：The formula for NPV is: \(NPV = \sum [(\text{Cash inflow at time t}) / (1 + r)^t] - \text{Initial Investment}\) where: t is the year, r is the discount rate.

Step 5 ：Substituting the given values into the formula, we get: \(NPV = \sum [(900000) / (1 + 0.08)^t] - 4000000\) where t ranges from 1 to 7.

Step 6 ：Calculating the above expression, we find that the NPV is approximately $685733.

Step 7 ：Final Answer: The project's NPV using a discount rate of 8 percent is \(\boxed{685733}\).