Fame Inc. is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the projects 3-year life, would have a zero-salvage value, and would require additional net operating working capital that would be recovered at the end of the projects life. Annual sales revenues and operating costs are expected to be constant over the projects life. Do you recommend to accept or reject this project? Justify your opinion.

WACC 10.0%

Net investment in fixed assets (basis) 75,000

Required net operating working capital 15,000

Straight-line depreciation rate 33.333%

Annual sales revenues 75,000

Annual operating costs (excl. depreciation) 25,000

Tax rate 35.0%