ABC, Inc. is currently evaluating an independent capital project, involving a fixed asset with a purchase price of $660,000. ABC will have to bear shipping and installation cost or $5,000. The asset has to be modified for use by ABC, which would cost an additional 520,000. Met Working Capital has to be increased by $25,000. This is expected to be fully recovered, when the project is ended. ABC will depreciate the asset according to MACRS 3-year class (33%, 45%, 15%, 7%] ABC plans to use the fixed asset to manufacture and sell a new product. in each of the first two years of the project. ABC expects to sell 55,000 units of the new product at a price of $12 per unit in the first year and $14 per unit in the second year. The expected sales in the 3^rd, 4^th and 5^th year of the project are, respectively, 60,000; 65,000 and 50,000 units, with unit sale price or $13; $11; and $10 in each of those years. The cash operating charges [excluding depreciation! are expected to be 60% of revenue in the 1^st year, 55% of revenue in the 2^nd 1 year and 651 Of revenue in each of the last three years of the project. The fixed asset is expected to have a pre-tax salvage value of $8,000 upon project termination. ABC is in 40% tax bracket. ABC's cost of capital is 14.6% Compute the following: The initial investment Net operating cash flows in years 1 thru 5 of the project The project's termination cash flow The project's NPV, IRR and MIRR Based on your findings in section 4 above, what should be ABC's decision on the project? Why