Your company is considering producing a short-lived fad item, which it estimates will have a project life of four years. The machinery required to produce the item costs $120,000, plus $10,000 to modify it for this company's use. It will be depreciated using the MACRS 5-year property class schedule. The firm estimates that the machinery could be sold at the end of the fourth year for $50,000.

The firm's analysts assume that if it goes ahead with the project, cash needs will increase by $10,000 and additional raw materials inventory will go up by $6,000, both at Time 0. It also estimates that by the end of Year 1, accounts receivable will rise by $5,000.

Sales revenues for the four years are expected to be $200,000, $400,000, $380,000, and $60,000, respectively. Variable operating costs will be 30 percent of sales, and fixed costs (excluding depreciation expense) will total $20,000 per year. The company has a 34 percent tax rate, and they estimate that they must meet a minimum 18.00% required rate of return to satisfy investors. Inflation is zero.

What are the project's NPV and IRR? Should the company invest in the project? You must show your work (timeline of projections and NPV and IRR calculations to receive credit

Also what the amount of taxes that the firm would incur on the sale of the equipment at Time 4?