You are considering a new project for your company.The project would result in projected increase in sales of $194,000 each year for five years.The project would have annual operating costs of $87,000 and depreciation of $13,000.(Ignore salvage value and net working capital in this problem.)

a.Draw the timeline showing all cash flows.

b.Assuming a tax rate of 21%, calculatenet income.

c.Calculateoperating cash flowfor the project. (OCF = EBIT + Depreciation - Taxes)

d.Assuming the project has initial cost of $300,000 and lasts for five years, calculate the NPV of the project. Assume a 9% hurdle rate.

e.Calculate IRR

f.Should accept or reject and why?