WES Inc. is hoping to reduce its level of fixed costs by implementing production assets that are more energy efficient and reliable. They are considering an initial outlay of $254 million for new industrial equipment that has an expected life of 8 years. The assets will be dereciated straight line to an ending book value of $62 million, which is also the expected market value. Existing equipment has a book value of zero and could be salvaged today for $26 million. WES analysts have determined the estimate for annual fxied cost savings to be about $38 million. In addition, WES will be able to reduce its NWC by $6.5 immediately- no other NWC changes are expected. WES analysts have determined that the annual fixed cost savings is somewhere between $36 and $46 million (assume a uniform distribution). The RRR is assumed to be 8.5%, and WES has a marginal tax rate of 35%. Does WES seem to be conservative or aggressive in its capital budgeting analysis? What types of mistakes will this tend to cause them? Compute the project's NPV. How confident will you be in recommending this project?