The following data have been collected by capital budgeting analysts at Erica, Inc. concerning a new product line currently under consideration by management:

Investment in machinery and equipment required to produce the product	$	3,500,000
Net increase in working capital associated with the new product. Assume that this investment will be recovered at the end of the project		500,000
Net cash inflow from operations for the expected life of the product line for:
Year 1		550,000
Year 2		900,000
Year 3		1,400,000
Year 4		1,800,000
Salvage value of machinery and equipment at the end of the product lines life		300,000
Cost of capital		10	%

(a.) Calculate the net present value of the proposed investment in the new product line. Ignore income taxes, and round all answers to the nearest $1. (b.) What will the internal rate of return on this investment be relative to the cost of capital? Explain your answer.