Your firm is considering a project that will save the firm $$100,000$ per year in labor costs. The

equipment to undertake this project will cost $$250,000,$ will last three years and will be subject to

MACRS depreciation with the annual recovery rates shown below. In addition to reducing labor, the

use of the equipment will allow the reduction of supplies inventory by $$75,000$ during the life of the

project. At the end of the project, you believe that you will be able to sell the equipment for $$50,000.$

Your firm has an average tax rate of $25\%$ and a marginal rate of $35\%.$ Your firm has a required rate of

return of $15\%$ on projects of this risk class. Compute the NPV of the project at the required rate of

return, the IRR of the project and the NPV of the project at the Exact IRR rate you determined above.

What is the highest discount rate at which this project may be accepted