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You are considering adding a new item to your company’s line ofproducts. The machine required to manufacture the item costs$600,000. The shipping costs are $2,000 and the installation costsare $28,000. It falls into the three-year MACRS classification. TheMACRS three-year depreciation rates are 33%, 45%, 15%, and 7%. Thenew item would immediately require an investment in NWC of $55,000.You plan to market the items for three years and then sell themachine for $90,000. You expect to sell 25,000 items per year at aprice of $22. You expect variable manufacturing costs to be $20 peritem and NO fixed costs will be incurred. If the tax rate is 40%and your weighted average cost of capital is 14% per year, what isthe net present value of selling the new item? What should youdo?