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

Cash inflows $90,000

Cash outflows $30,000

Net cash inflow $60,000

Present value factor at 16% X4.833

Present value of net cash inflow $289,980

Initial cash outlay $225,000

Net present value $64,980

1. Are the accountant's computations correct? If not, compute the correct net present value.

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