Assume that you were recently hired as assistant to the director of capital budgeting and you must evaluate the new project. The energy drink would be produced in an unused building adjacent to NRG's College Park plant; NRG owns the building, which is fully depreciated. The required equipment would cost $250,000, plus an additional $40,000 for shipping and installation. In addition, inventories would rise by $25,000, while accounts payable would increase by $5,000. All of these costs would be incurred at t = 0. By a special ruling, the machinery could be depreciated under the MACRS system as 3-year property. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. The project is expected to operate for 4 years, at which time it will be terminated. The cash inflows are assumed to begin 1 year after the project is undertaken, or at t = 1, and to continue out to t = 4. At the end of the project's life (t = 4), the equipment is expected to have a sales proceeds of the used machine of $25,000.