ABC Company is studying a project that would have an eight year life and

require a $1,600,000 investmentin equipment. At the end of eight years, the

project would terminate and the equipment would have no value left over.

The project would provide net income each year as follows:

Sales 3,000,000

Less COGS 300,000

Gross Margin 2,700,000

Less: Operating Expenses

Advertising, Salaries and other fixed 1,200,000

Salary Expense 1,000,000

Amortization 200,000

Total Expenses 2,400,000

Net Income 300,000

The company's discount rate is 18%

1) compute the net annual cash inflow from project

2) compute the net present value of the project. Is it acceptable?