2. (50 pts) In response to the quickly mutating SARS-CoV-2, the private Kansas biotechnology company you work for needs to buy a new Illumina Sequencer to determine novel coronavirus strains in the state of Kansas to inform state health officials. This new sequencer will cost $400,000. Cash flow estimates are predicted below for the 5-year project life. For depreciation purposes, this equipment is classified as a 3-year property for MACRS depreciation. The salvage value is determined at $80,000. The tax rate is 40%. The company has set a MARR of 10%. To make this purchase, the company only has $350,000 to pay as an initial investment and must borrow $50,000 to cover the cost of the sequencer. The loan is to be paid off with annual payments for the first 3 years of the project at an interest rate of 8% per year. a) Using present worth analysis, determine whether the project should be approved and executed by your company. After completing the initial analysis, you learn that 3% inflation was already built into the cash flows (i.e. all of the numbers you used in part a). b) Re-do your analysis of this project by removing the effect of inflation and then assess whether the project is still economically justifiable at a MARR = 10%. Use the table below as a guide. If you create your own table in excel, you MUST label the columns so that we can determine your steps and how you got to your answers. Year Loan Principle 0 Investment Revenue Operating MACRS MACRS Loan & Salvage Costs Factors Depreciation Payment -350,000 100 000 1.000 0.3333 100.000 10.000 0.4445 105,000 22,000 0.1481 120.000 10.000 0.0741 +80,000 150,000 10,000 2 5 CFBT TI Loan Interest Taxes CFAT PW WNLOA