2. The KEB HANA Corporation is considering the introduction of a new product. Generally, the company's products have a life of 5 years and after which they are deleted from the range of products that the company sells. The new product requires the purchase of new equipment costing $400,000, freight and installation charges is $100,000, the equipment will be depreciated by straight line method for 5 years. The useful life of the equipment is 5 years, with an estimated residual value of $170,000 at the end of that period. The new product will be manufactured in a factory already owned by the company. The factory originally cost $150,000 to build and has 5 years to run and provides for an annual rental of $20,000. Under the lease agreement, the KEB HANA can cancel the lease by paying the lease compensation equal to 1 year's rental payment. The compan conduct a market research during the first year with a cost $50,000. Additions to current assets will require $40,000 at the commencement of the project and are assumed to be fully recoverable at the end of the fifth year. The capacity of the production is as follows: - The volume of products/year: 10,000 units, selling price: $80, all sell by cash. - Cost of goods sold: $42/unit (there is no inventory) - Selling and administrative expense: 8% of sale - Product life cycle (as well as the project life cycle): 5 years; Project started for the year 1. - KEB HANA is in the 40% tax bracket It's assumed that all cash flows are received at the end of each year and the required rate of return is 12% annum. What is the net present value and IRR of adding the new product