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XYC is a large technology company. XYZ's research and development department has been applying its expertise in microprocessor technology to develop a small computer designed to control home appliances. Once programmed, the computer will automatically control the heating and air-conditioning systems, security system, hot water heater, and even small appliances such as a coffee maker. By increasing a home's energy efficiency, the computer can cut costs enough to pay for itself within a few years. Developments have now reached the stage where a decision must be made about whether or not to go forward with full-scale production. XYZ's marketing vice-president believes that annual sales would be 20, 000 units if the units were priced at euro 30 each, so annual sales are estimated at euro 600, 000. The engineering department has reported that the company would need additional manufacturing capability, and the necessary equipment would be purchased, paid, and installed late in December, 2015. The equipment would be depreciated on a straight-line basis over 10 years, and would cost euro 50, 000, including transportation and installation. Moreover, the project would also require an initial investment of euro 25, 000 in net operating working capital, which would also be made on December, 2015. The project's estimated economic life is four years. At the end of that time, the equipment would have a market value of euro 25, 000. The production department has estimated that variable manufacturing costs would be euro 25 per unit, and that fixed overhead costs, excluding depreciation, would be euro 80, 000 a year. XYZ's tax rate is 25%; its cost of capital is 10%; and, for capital budgeting purposes, XYZ's policy is to assume that operating cash flows occur at the end of each year. Because the plant would begin operations on Jan, 2016, the first operating cash flows would occur on Dec, 2016. You are one of the company's financial analysts, and you must conduct the capital budgeting analysis and prepare a report with your recommendations