$1.$ Alfight Corporation $($the comry$)$ plans to launch a new plece ofequiptha proler, h

order to execute its plan, the company needs to purchase a new piece of equipment for $$500,000.$ The equipment has a useful life of four $(4)$ years after which it can be sold for $$25,000,$ The project also has a life of four $(4)$ years. In addition, the company expects to make an investment of $$50,000$ in Net Working Capital to operate the equipment, which will be recovered at the end of the project. As a result of this investment, the company expects to increase its revenues by $$600,000$ per year. Incremental Variable Operating expenses are estimated at $30\%$ of incremental revenues per year. The project will also require a fixed expense of $$30,000$ per year.

The new machine is much bigger in size. AllRight intends to install the new machine in an existing facility in a different location of the city that they purchased for $$500,000$ two years ago. AllRight is currently leasing that space out to a third party for $$25,000$ per year. Once, the new machine is installed there, AlRight will lose the lease revenue.

The company has a tax rate of $30\%,$ and its cost of capital or discount rate is $12\%.$ The CCA rate $($depreciation rate$)$ for the equipment is $25\%($use straight$-$line depreciation$).$

Additional information for PV CCA Tax shield calculation:

Sale Pricepv $=$ $$15,887\mathrm{.}95$

Based on the information above, answer the following using the table given in the next page $($round your answers to the nearest dollar$)$:

$$Calculate the Cash Flows after tax.

$$Calculate the Free Cash Flows.

$$Calculate the Net Present Value $($NPV$)$ of the investment in the equipment.

$$Should AllRight accept or reject the project?