Arrieta Natural Ecological Solutions, Inc. is a successful technology, supply, and equipment company. Arrieta provides technical, software and equipment solutions to a wide variety of companies as well as developing its own products. The firm has beneted from the swift growth in the globalization of supply chains and the world economy although the Covid19 pandemic and the UkraineRussia conict has caused concern about the dependability of supply chains. Ivan Arrieta, the corporate founder, is considering a push to manufacture its rst product intended for the consumer market. The R&D arm ofthe company, led by Siqi Iia, has recently developed a portable solar generator producing electricity for outdoor enthusiasts, tailgaters, and as a backup source of electricity during power outages. This is not a ne'ur breakthrough product as other companies are already producing solar generators. However, Arrieta's new solar generator produces signicantly more electricity more efficiently than any other portable solar generator currently on the market. If the company decides to go forward with this project, an assembly facility will belgcaledip buildings leased for $0.840 million annually. This lease payment is taxdeductible, paid at the beginning of each year= and has an escalation clause causing the lease payment to increase 2.0% annually over the life of the project. Thus, the lease payment at the beginning of year 1 {at time zero) will be $0.840 million and it will then increase by 2.0% annually thereafter. Equipment for the facility will cost $24 million including delivery and installation. Net working capital needs will be $5.3 million immediately to support the facility. Assume at the end of the project= 5 six year life the net working capital will be returned as it will no longer be needed. Equipment depreciation will be according to MACRS 5year asset class (20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.26% respectively for years one through six). The equipment is expected to have a salvage value of $12.0 million aer 6 years of use. Arrieta Natural Ecological Solutions expects to produce and sell each solar generator at an initial price of$1,500 per unit. The facility's annual maximum production capacity is expected to be 100,000 units during the 6year economic life of the facility. The forecast is for actual production and sales to be 70,000 units annually. Fixed cash operating costs (not including depreciation and lease payment) are estimated to be $16.5 million annually and variable cash operating costs are estimated at $900 per unit. Arrieta Natural Ecological Solutions' federal plussmte effective tax rate is 31%. Assume that Arriem Natural Ecological Solutions is able to talce advantage of all tax shields (umdeductions). Your task is to analyze this project. You must recommend acceptance or rejection and evaluate the project's acceptability using the net present value (NPV), internal rate of return ( {R}, and modied internal rate of return (MIKE) criteria. Arrieta Natural Ecological Solutions weighted average cost ofcapital WACC) and thus the project's required rate ofreturn is 15%. Justin Cummins, the CFO, wondered whether it would be appropriate to assume neutral ination equal to the 4.0% expected general rate of ination, and if not, how sensitive the results would be to alternative assumptions of differential ination impacts onrevenues and costs. Justin expects these and other questions to be raised when you present your recommendations to the Executive Committee