You are the financial analyst for a tennis racket manufacturer. The company is considering using a graphitelike material in its tennis rackets. The company has estimated the information in the following table about the market for a racket with the new material. The company expects to sell the racket for $6$ years. The equipment required for the project will be depreciated on a straight$-$line basis and has no salvage value. The required return for projects of this type is $13$ percent and the company has a $21$ percent tax rate.

Pessimistic Expected Optimistic

Market size $116,000126,000138,000$

Market share $19\%23\%25\%$

Selling price $ $166$ $ $171$ $ $175$

Variable costs per unit $ $109$ $ $105$ $ $102$

Fixed costs per year $ $981,000$ $ $926,000$ $ $896,000$

Initial investment $ $1,986,000$ $ $1,836,000$ $ $1,816,000$