Innovation inc. is considering the following project::

Cost of the investment 85,000

Working capital required 30,000

Annual cost saving 24,000

Replacing some parts of the equipment in year 6 19,000

Estimated salvage value at the end of the project 2,800

Life of the project 8 years

Discount rate 15%

At the end of the end of the project, working capital will be releases and may be used elsewhere by the company.

Required:

Compute the projects net present value:

Net present value=

Based on the NPV of the project, will the company accept the project?

Is the IRR higher or lower than the companys discount rate?