Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%.

The companys new accountant computed the net present value of the project using a minimum required rate of return of 16% (the companys cost of capital). The accountants computations follow:

	Cash inflows		$ 90,000
	Cash outflows		30,000
	Net cash inflow		$ 60,000
	Present value factor at 16%		4.833
	Present value of net cash inflow		$289,980
	Initial cash outlay		225,000
	Net present value		$ 64,980

Required:

a. Are the accountants computations correct? If not, compute the correct net present value.

b. Is this capital project acceptable to the company? Why or why not?