Problem:ABC Pharmaceutical is considering a project that requires a new piece of lab equipment that they purchase today for $80,000. It will depreciate on a straight-line basis over 10 years, after which it has a salvage value of $25,000. The new project is expected to produce $50,000 in yearly revenue and $7,500 per year of labor and maintenance, and $10,000 in yearly fixed costs. Revenues and expenses are increased by 3% inflation eachyear.Thecost of capital for this type of equipment is 21%. What is the net present value and IRR of the project?

$80,000.00Equipment Cost 10 Depreciable Years $5,500.00Depreciationstraight-line basis over10 years $25,000.00Salvage value 21%COC $50,000.00Net Revenue per Year $7,500.00Labor and Maintenance cost $10,000.00Fixed Costs 3%Inflation Rate