MMCC is investing the feasibility of a new line of power mulching tools aimed at the growing number of home composters. Based on exploratory conversations with buyers for large garden shops, it projects unit sales as follows Year Unit sales 1 3,000 2 5,000 3 6.000 4 6,500 5 6.000 6 5.000 7 4.000 3.000 8 The new power mulcher will be priced to sell at $ 120 per unit to start When the competition catches up after 3 years MMCO competition anticipates that the price will drop to $ 110 (precisely at year 4), The power mulcher project will require S 20.000 in net working capital at the start Subsequently total networking capital at the end of each year will be about 15% of sales of that year The variable cost per unit is $60 Total fixed costs are $ 25.000 per year versity You are goed in as a Yea 1 MACRS percentage 14 29% 24 49% 2. 3 17 49% 4 12 496 5 8.93% 6 892% 7 8 93% 8 4.46 The equipment will actually be worth about 20% of its cost in eight years The relevant tax rate is 34% and the required return is 15% Based on this information should MCC proceed with this investment it to calculate me NPV, you should dem OCR changes in Nw and CAPEX The sum of mese 3 categories will give you the total cash low needed for NPV - The new power mulcher will be priced to sell at $ 120 per unit to start when the competition catches up after 3 years, MMCC anticipates that the price will drop to $ 110 (precisely at year 4). The power mulcher project will require $ 20,000 in net working capital at the start Subsequently, total networking capital at the end of each year will be about 15% of sales of that year. N The variable cost per unit is $ 60, Total fixed costs are $ 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 thus, qualifies as seven year MACRS property where the percentages of depreciation are given below