a Your company has come up with a new product with a 4-year life (pretend you're introducing a trendy product, which will not survive long in the marketplace). Your firm paid $30,000 for a Tulane intern to perform a financial analysis last month to determine the potential demand for the product (not bad pay, eh?). It is felt that the new product will generate sales of $500,000 in year 1. and grow at 4% per year. The fixed costs associated with this will be $90,000 per year, and variable costs will amount to 20 percent of sales. The initial investment in equipment necessary for production of the product will cost $150,000 and will be depreciated in a straight-line manner for the four (4) years of the product's life to a salvage value of 0. There is no salvage value. Your inventory is 15% of your next year's sales. Your firm has a tax rate of 21%. Your firm's required rate of 2 3 return on projects with the same risk as this product is 10%. Calculate the NPV of 4 this project. Should you accept or reject it? 5 HERE ARE THE QUESTIONS 6 7 LAY OUT ALL THE CASHFLOWS 8 CALCULATE THE NPV 9 Calculate the IRR 10 11 NEW SCENARIO-variable costs decrease to 18% of sales and sales increase by 8% per year-what is the 12