2. (35 points) Sicario Instruments, Inc. plans to introduce a new product in the market. The cost of the machines to produce these goods is $ 7,500,000. Sicario will consider these machines to be five-year MACRS properties. The firm expects that these machines will be sold for $ 1,200,000 at the end of the fifth year. Sales are projected to be 1,300 units per year, price per unit will be $ 8,000; variable cost per unit will be $ 5.000: and fixed costs are estimated to be $2.5 million per year. This project also requires an initial investment in net working capital (NWC) of $ 1,300,000. The required rate of retum (l.e., cost of capital) on the project is 10.5 % and the relevant tax rate is 35%. What are NPV and IRR of the project? Should Sicario accept or reject the project? Depreciation allowance for five-year MACRS property is as follows: Year Depreciation allowance OWN 20% 32% 19.20% 11.52% 11.52% 5.76%