USA Corp. is considering a new product whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero-salvage value, and no change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other American products and would reduce their pre-tax annual cash flows.

What is the project's NPV? IRR? Briefly discuss the results and why you would accept or reject the equipment.

WACC	10%
Pre-tax cash flow reduction for other products (cannibalization)	-$5,000
Investment cost (depreciable basis)	$80,000

Annual sales revenues	$67,500
Annual operating costs (excl. depreciation)	-$25,000
Tax rate	35.00%