Long-Term Acute-Care Hospital (LTAC) owns an abandoned warehouse. The after-tax value of the land is $800,000. The furniture and fixtures of the warehouse have been fully depreciated to an after-tax market value of $70,000. The two options LTAC faces are either to sell the land and furniture and fixtures or to convert the building into a forty-bed, free- standing new facility. To refurbish and renovate the facility would cost $4,500,000. The new building and equipment would be depreciated on a straight-line basis over a ten- year life to a $700,000 salvage value. At the end of ten years, the land could be sold for an after-tax value of $3,500,000. The new rehab facility’s pro forma income statement for the next ten years is shown below. Net working capital will increase at a rate of $20,000 per year over the life of the project. LTAC has a 30 percent tax rate and a required rate of return of 7 percent. Use both the NPV technique and IRR method to evaluate this project. (Hint: see Appendices C, D, and E.)