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NEW PROJECT ANALYSIS You must analyze a potential new product—acaulking com- pound that Cory Materials’ R&D people developedfor use in the residential construction industry. Cory’s marketingmanager thinks the company can sell 115,000 tubes per year at aprice of $3 25 each for 3 years, after which the product will beobsolete. The required equipment would cost $150,000, plus another$25,000 for shipping and installation. Current assets (receivablesand inventories) would increase by $35,000, while currentliabilities (accounts payable and accruals) would rise by $15,000.Variable cost per unit is $1 95, fixed costs (exclusive ofdepreciation) would be $70,000 per year, and fixed assets would bedepreciated under MACRS with a 3-year life. (Refer to Appendix 12Afor MACRS depre- ciation rates.) When production ceases after 3years, the equipment should have a market value of $15,000. Cory’stax rate is 40%, and it uses a 10% WACC for average-riskprojects.Spreadsheet assignment: at instructor’s option Construct aspreadsheet that calculates the cash flows, NPV, IRR, payback, andMIRR.