10%) Your team just completed the cost estimates for your project. If accepted, you would need an initial investment of $200,000 in Research and Development. There will be construction costs in the first year of $350,000. Annual sales of $300,000 will begin in year 2 and continue through year 5. Your annual operating costs will be $50,000 for each year you sell the product. If the discount rate is 12%, what is the NPV for this project? Should you invest in this project based on the NPV? Set initial investment as occurring in Year 0.

(10%) What is the IRR for the project in problem #6? If the Minimum Attractive Rate of Return (MARR) is 20%, would you recommend investing in this project? Discuss any reasons that you might not invest in a project even if it exceeds the MARR.