Cost of equipment = $400,000 Shipping & installation will be $20,000 $25,000 in net working capital required at setup 3-year project life, 5-year class life Simplified straight line depreciation Revenues will increase by $220,000 per year Defects costs will fall by $10,000 per year Operating costs will rise by $30,000 per year Salvage value after year 3 is $200,000 Cost of capital = 12%, marginal tax rate = 34%