You are considering a 3-year project of which details are summarized below. Your required rate of return for capital budgeting purposes is 20 percent.

• Annual sales = 30,000 units
• Unit sales price = $5.00
• Variable costs = $2.00 per unit
• Annual fixed costs = $18,000
• Initial capital investment = $72,000, depreciated to zero over 3 years
• Initial investment in working capital = $20,000, fully recovered at the end of the project
• The tax rate is 25%

a. What is the projects annual net income?

b. What is the projects annual operating cash flow?

c. What is the projects initial capital investment?

d. What is the projects NPV?

e. What is the projects IRR?

f. Should you accept this project? Why or why not?