Best Food Company is considering a new product whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero salvage value, and no change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other Best products and would reduce their pre-tax annual cash flows. What is the project's NPV? IRR? Discuss the results.

WACC                                                                                                 10.0%

Pre-tax cash flow reduction for other products (cannibalization)             −$5,000

Investment cost (depreciable basis)                                                      $80,000

Annual sales revenues                                                                         $67,500

Annual operating costs (excl. depreciation)                                           −$25,000

Tax rate                                                                                                35.0%