Facts: You are thinking about starting a business producing customized key chains you feel will appeal to new drivers. Your machine that will be used to make these key chains will cost $500,000, and have a depreciable life of three years (MACRS- 33% year 1, 45% year 2, 15% year 3 and 7% year 4). Your research leads you to believe you can sell 200,000 units per year, increasing 10% each year, and you plan on pricing your product at $4.00 (which will remain through the life of the project). Annual fixed costs will equal $150,000, which includes the lease of the building, insurance and a production manager. Variable costs are estimated to be 50% of sales. You will build $50,000 of inventory to start, of which $20,000 will be purchased on credit (accounts payable). The life of the project is four years, the salvage value of the machine at the end of year four is $50,000 and working capital, which remains fixed for four years, is liquidated. WACC = 12% Tax Rate= 35% Calculations: Calculate the initial cash flow in year 0. Calculate the operating cash flows for years 1-4. Calculate the salvage value of the machine at the end of year 4, and amount received through the liquidation of working capital. Calculate the NPV AND the IRR for this project. Is this a project you should go forward with? Explain your answer.