Problem 2: USA Corp. is considering a new product whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero- salvage value, and no change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other American products and would reduce their pre-tax annual cash flows. What is the project's NPV? IRR? Briefly discuss the results and why you would accept or reject the equipment. WACC 10.0% Pre-tax cash flow reduction for other products (cannibalization) Investment cost (depreciable basis) -$5,000 $80,000 Annual sales revenues $67,500 Annual operating costs (excl. depreciation) -$25,000 Tax rate 21.0% 1