1. ACME Widget Company has been selling yellow widgets as fast as they can produce them. Management is considering a project proposal to expand the existing production capacity by buying a new machine. The machine costs $16 million and will have a useful life of 4 years after which it must be replaced. The salvage value of the machine at the end of 4 years is estimated to be $1 million. If the machine is purchased, the project is expected to contribute an additional $5 million in year 1 and an additional $6 million per year in years 2, 3, and 4 to the companys gross profit [Gross profit = sales revenue COGS, and does not include taxes or tax deductions such as depreciation]. Except for the purchase of the machine, assume all cash flows take place at the end of the period. The finance department has determined that the appropriate cost of capital for this project is 12% (APR). The corporate tax rate is 20%. For tax purposes, the machine can be depreciated using straight line depreciation with a book value of zero at the end of 4 years. Should the company purchase the machine? Show your work to justify your decision. Make sure your key numbers are clearly labeled.