AT&T inc is evaluating a new project whose data are shown below. The project has a 4-year tax life and would be fully depreciated by the straight-line method over 4 years, but it would have a positive pre-tax salvage value at the end of Year 4, when the project would be closed down. Also, some new working capital would be required, but it would be recovered at the end of the project's life. Unit sales and fixed costs will be constant, but the sales price and variable cost should increase with inflation. Forecast the corresponding cash flows and determine the value of this project.

WACC	11.00%
Net investment in fixed assets (depreciable basis)	$280,000
Required new working capital	$10,000
Average price per unit, Year 1	$90
Unit Sold per year	80,000 units
Variable operating cost/unit, Year 1	$29
Fixed Cost each year (not including Depreciation) (constant)	$120,000
Expected pretax salvage value	$11,000
Tax rate	35.00%
Expected inflation rate per year	2.50%

	t = 0	t = 1	t = 2	t = 3	t = 4
Inflation
Price per unit
VC per unit
Units sold
Sales revenues
- Fixed op. cost (excl. deprec.)
- Variable op costs
- Depreciation
Operating income (EBIT)
- Taxes
After-tax EBIT
+ Depreciation
Cash flow from Operation
Investment in working capital
Capital Spending
Salvage value, pre-tax
- Tax on salvage value
Total cash flows

What is the projects NPV and IRR? What decision should be made?