Your company has been doing well, reaching $1 million in earnings and is considered launching a new product. Designing the new product has already cost $500,000. The company estimates that it will sell 700,000 units per year for 4$ per unit and variable and non labor costs will be 1.75 $per unit. Fixed costs include 550,000 per year. Production will end after year 4. New equipment costing $1.8 million will be required. The equipment will be depreciated to zero using the 5-year MACRS schedule. You plan to sell the equipment at the end of year 4 for 32% of the initial cost. Your current level of working capital is 300,000$. The new product will require the working capital to increase to a level of 390,000 immediately, then to 410,000$ in year 1, 395,000 in year 2, year 3 the level will be 360,000$and finally in year 4 the level will return to 310,000$. Your tax rate is 30%. The discount rate for this project is 12%. Do the investment appraisal for this project by calculating its NPV and IRR?

You need to comment on the investment appraisal for minimum of 50 words explaining the reason for accepting/rejecting the project.