As the finance manager of Shelfish Incorporated, you are considering purchasing a new piece of equipment for which the company estimates:

• Equipment Cost $290,000 with useful life of 7 years;
• Depreciate over 7 years using MACRS (the salvage value is not considered when using
• this method). Depreciation rates are as follows:o
• Year 1: 14.29% oYear 2: 24.49% oYear 3: 17.49%
• oYear 4: 12.49%o
• Year 5: 8.93%o
• Year 6: 8.92%o
• Year 7: 8.93%o
• Year 8: 4.46%
• Equipment purpose: to produce 10,000 shelves per year for 5 years and expects to sell all of them
• Equipment annual maintenance expenses of $10,000 per year
• Shelf sale price $25 each; Variable Costs per shelf: $15
• Working Capital requirements (balance) for the project are as follows:

Year 0 = $10,000Year 1 = $15,000Year 2 = $17,000Year 3 = $15,000Year 4 = $10,000

At the end of the five-year period, the project will end. The company will be able to sell the equipment for $50,000. The company has a 35% marginal tax rate and a required rate of return of 15%.

What is the NPV of this project? Should you undertake it?