Ofego Inc. is considering a 3 - year project with an initial cost of $ 846,000 . The project will not directly produce any sales but will reduce operating costs by $ 295,000 a year . The equipment is depreciated straight- line to a zero book value over the life of the project . At the end of the project the equipment will be sold for an estimated $ 30,000 . The tax rate is 34 % . The project will require $ 31,000 in extra inventory for spare parts and accessories . Should this project be implemented if Ofego requires an 8 %