An engineer has an idea for a new product. To get the product to market will require an investment of $575,000. Salvage is expected to be 0, and the investment is expected to last 10 years. The investment qualifies for a 7 year life under the MACRS system of depreciation. Annual operating and maintenance costs are expected to be $25,000 before any increases. The investment also qualifies for a tax credit of 10%. This tax credit will not decrease the depreciable base. The engineer believes the product will sell for $35.00. The expected annual demand is believed to be 7000. It is thought that the annual price increase for the product will be 2.3%. Labor and material expenses are expected to be $10.00 per unit. It is expected that these costs will increase 3% each year. Maintenance expenses are also expected to increase by 3% each year. Financing will be 78% through shareholders and 22% debt through a bank loan at 8.75% per year. The debt will be repaid through equal annual payments. The tax rate is 40%.

Required:
Prepare a report analyzing this investment.