18) (25 points) Gateway Communications is considering a 5-year project with an initial fixed asset cost of $2.27 million which will be depreciated straight-line to a zero book value over its 8-year useful life. At the end of the project the equipment will be sold for an estimated $300,000. The project will not directly produce any sales but will reduce operating costs by $825,000 a year. It is expected that working capital related to this project is equal to $350,000 throughout the life of the project. The investment in working capital will be recouped when the project ends. The firm's average tax rate is 32.2% and the marginal tax rate is 34%. The required return on this project is 14 percent. a. Using the NPV Decision Rule, should this project be accepted? Why or why not? b. Using the Profitability Index Rule, should this project be accepted? Why or why not? 18) (25 points) Gateway Communications is considering a 5-year project with an initial fixed asset cost of $2.27 million which will be depreciated straight-line to a zero book value over its 8-year useful life. At the end of the project the equipment will be sold for an estimated $300,000. The project will not directly produce any sales but will reduce operating costs by $825,000 a year. It is expected that working capital related to this project is equal to $350,000 throughout the life of the project. The investment in working capital will be recouped when the project ends. The firm's average tax rate is 32.2% and the marginal tax rate is 34%. The required return on this project is 14 percent. a. Using the NPV Decision Rule, should this project be accepted? Why or why not? b. Using the Profitability Index Rule, should this project be accepted? Why or why not