DOGSRULE Company is contemplating the purchase of a new piece of equipment that would cost $350,000. The equipment has a four-year life. It will depreciate straight-line. At the end of the project the company will sell the equipment for $40,000. You will save $130,000 before taxes per year and you will be able to reduce net working capital by $50,000. If the tax rate is 21%, what is the IRR?

a. Draw a timeline showing all cashflows.

b. If there is a hurdle rate of 11%, calculate the NPV. Should you accept or reject the project? Why?