Your company may introduce a new line of tennis rackets. Initial Investment of $1,000,000, straight line depreciated to 0 salvage value over 5 year life. Sales: 25,000 units @ $55 per unit, Variable Costs: $25 per unit, Fixed Costs: $200,000 per year. Annual OCF 410,000.

What is the NPV of the Racket Project if the WACC = 12%

Re-compute the NPV of the Racket Project using 5-year MACRS. Note that for a 5-year asset, the MACRS is for 6 years. Assume that there are no sales in year 6, and no other costs, but MACRS depreciation can be claimed for year 6. Assume WACC = 12%.