$(10$ points$)($Ignore income taxes in this problem.$)$ Axillar Beauty Products

Corporation is considering the production of a new conditioning shampoo which

will require the purchase of new mixing machinery. The machinery will cost

$$310,000,$ is expected to have a useful life of $10$ years, and is expected to have a

salvage value of $$35,000$ at the end of $10$ years. The machinery will also need a

$$25,000$ overhaul at the end of year $6.$ A $$40,000$ increase in working capital will

be needed for this investment project. The working capital will be released at the

end of the $10$ years. The new shampoo is expected to generate net cash inflows of

$$80,000$ per year for each of the $10$ years. Axillar's discount rate is $12\%.$

Required:

a$.$ What is the net present value of this investment opportunity?

b$.$ Based on your answer to $($a$)$ above, should Axillar go ahead with the new

conditioning shampoo?