MMCC is investigating the feasibility of a new line of power mulching tools aimed at the growing number of home com posters. Based on exploratory conversations with buyers for large garden shops. MMCC projects unit sales as follows: The new power mulcher will sell for SI20 per unit to start. When the competition catches up after three years, however. MMCC anticipates that the price will drop to $110. The power mulcher project will require S20.000 in net working capital at the start. Subsequently, total net working capital at the end of each year will be about 15 percent of sales in the next year. The variable cost per unit is S60. and total fixed costs arc $25.000 per year. It will cost about $800,000 to buy the equipment necessary to begin production. This investment is primarily in industrial equipment, which qualifies as seven-year MACRS property. The equipment will actually be worth about 20 percent of its cost at the end of the eighth year, or .20 Times $800,000 = $160,000. The relevant tax rate is 34 percent and the required rate of return is 15 percent. If the required simple payback period is 6 years, should MMCC proceed? If the required discounted payback period is 6 years, should MMCC proceed? If MMCC requires a lowest PI for new investment to be 1.10, should MMCC proceed? What is the IRK and NPV of the investment project? Based on these two investment criteria, should MMCC proceed