Case study: Shultz Business Systems is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years, it will be depreciated on a straight-line basis. In addition, some new working capital would be required, but it would be recovered at the end of the project's life. This is just one of many projects for the firm, so any losses can be used to offset gains on other firm projects. What is the project's expected NPV and IRR?

WACC	10.0%
Net investment cost (depreciable basis)	$200,000
Required new working capital	$17,000
Units sold	50,000
Average price per unit, Year 1	$25.00
Fixed Cost each year (excl. Depreciation) (constant)	$150,000
Variable op. cost/unit, Year 1	$20.20
Expected inflation rate per year	5.00%
Tax rate	40.0%
Expected pretax salvage value	$7,000