that variable costs would amount to $$$18\mathrm{.}50$ thousand per unit. After Year $1,$ the sales price and variable costs will increase at the inflation rate of $2\mathrm{.}5\%.$ NOTE: The Input Data section The company's nonvariable costs would be S$$2$ million at Year $1$ and would increase with inflation. NOTE: The Input The server project would have a life of $4$ years. If the project is undertaken, it must be continued for the entire $4$ years. Also, the project's returns are expected to be highly correlated with returns on the firm's other assets. The equipment would be depreciated over a $5-$year period, using MACRS rates given in the Input Data section below. The estimated market value of the equipment at the end of the project's $4-$year life is $$$3,025$ thousand. Webmasters' federal$-$plus$-$state tax rate is $25\%.$ Its cost of capital is $12\%$ for average$-$risk projects, defined as projects with a coefficient of variation of NPV between $2$ and $2\mathrm{.}3.$ Low$-$risk projects are evaluated with a WACC of $6\%,$ and high$-$risk projects at $18\%.$