Dumpe Industries is analyzing an average-risk project, and the following data have been developed. Annual unit sales will be constant, but the sales price will increase with inflation, which is projected to be 5%o. Fixed costs will also be constant, but variable costs will rise with inflation. The project involves buying a $100,000 piece of equipment that should last for 3 years and be straight-line depreciated to zero. At the end of the project there up be a $14,500 after-tax salvage value (hint: this should be added to the final year operating cash flow). T his is just one project for the firm, so any losses can be used to offset gains on other firm projects. What is the year operating cash flow? What is the ycar 2 depreciation expense? What is the year 3 total cash flow (hint: operat cash flow plus net after tax salvage value)? What is the project's IRR using a 10% WACC recommend Dumpe accept or reject the project? ? Would you WACC Net investment cost (depreciable basis) Units sold (per year) Average price per unit, Year 1 Fixed op. cost excl. depreciation (constant) Variable op. cost/unit, Year 1 10.00% $100,000 40,000 $25.00 $150,000 $20.00 33.33% 40.0% $14,500 dn Annual depreciation rate Tax rate After-tax salvage value Year 1 OCF: Year 2 Dep: Year 3 Total CF: IRR Accept or Reject