WearWise, Inc., a manufacturer of wearable electronic gadgets, is considering a project on iHelmet. The proposed project would require the following: - Fixed costs of $500,000 annually. - Variable costs are estimated at 25% of sales. - The company plans to use a land as a manufacturing site for the project. The land was purchased 4 years ago for $750,000 after tax. Based on a recent appraisal, the company believes it could sell the land today for $900,000 on an after-tax basis, and in 3 years the land could be sold for $1,000,000 after taxes. - Net working capital of $150,000 will be required to begin the project and will be completely recovered at the end of the project. - Purchase of a new equipment for production will cost $3,000,000. The equipment will be depreciated straight-line to zero book value over an expected life span of three years. At the end of the project, the equipment can be sold for $300,000. - The company also hired a marketing firm to analyze the iHelmet market, at a cost of $125,000. - The firm will be able to sell 2,500 units in year one, 4,000 units in year two, and 2,000 units in year three. Since wearable gadgets appear to be a fad, sales would be zero|after the end of the three-year period. - Each of the iHelmet will be sold at a price of $1,000. Assume that WearWise has a 20% corporate tax rate and a cost of capital of 15%. a. What is the after-tax salvage value of the equipment at the end of the project's life? b. Calculate the operating cash flow for the project in each of the next three years. c. Calculate the NPV and IRR for the project. Should the company accept the project? d. WearWise estimates that launching the new iHelmet will reduce the incremental after-tax cash flows of the firm's existing gadgets by $225,000 per year for the next three years. How does this new assumption affect your answers to part (c)