KTI Inc. is considering a project that would have a five-year life and require a $320,000 investment in equipment. The project will release working capital of $20,000 at the beginning of the project. At the end of five years, the project would terminate, the equipment would have $20,000 residual value, and the working capital will be increased by $20,000.The project would provide net income each year as follows:

Sales .................................................$500,000

Less: Variable Expenses ..........................$220,000

Contribution Margin ..............................$280,000

Less: Fixed Expenses ..............................$230,000

Net Income ..........................................$50,000

All of the above items, except for depreciation, represent cash flows. The depreciation is included in the fixed expenses. KTI's required rate of return is 10%, and the payback period is 2.5 years.

REQUIRED

A. What is the project's net present value?

B. What is the project's internal rate of return?

C. What is the project's payback period?

D. What is the project's accrual accounting rate of return?

E. Should KTI invest in this project? Provide your argument based on your quantitative analysis from A to D?