You are the financial analyst for a tennis racket manufacturer. The company is considering using a graphite-like material in its tennis rackets. The company has estimated the information in the table below about the market for a racket with the new material. The company expects to sell the racket for five years. The equipment required for the project has no salvage value. The required return for projects of this type is 13 percent, and the company has a 40 percent tax rate. Should you recommend the project?

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PESSIMISTIC EXPECTED OPTIMISTIC 126,000 150,000 Market size Market share Selling price Variable costs per year Fixed costs per year Initial investment 140,000 1596 1996 23% S 106 50 S 975,000 $2,200,000 S 115 47 S 925,000 $2,200,000 S 124 S 43 S 870,000 S2 200,000