3. CAPITAL BUDGETING - THE UFRO COMPANY. The UFRO Company is considering the replacement of an existing computer with a new computer, faster and with expanded capacity. If the new computer is purchased the existing (old) computer will be sold for $80,000. The existing computer was purchased two years ago (T=-2) for $200,000. It is being depreciated over its five-year life using the 3-year MACRS schedule. It is expected to salvaged for $50,000 (T=3). The new computer will be purchased for $500,000. If the new computer is purchased, accounts receivable decrease immediately by $20,000: inventory will decrease immediately by $40,000; and accruals will decrease immediately by $30,000. The UFRO Company has a 30% corporate tax rate. The modification to the building, paid by UFRO, will cost $80,000 If the new computer is purchased, sales in year 1 will be $600,000, sales in year 2 will be $700,000, and sales in year 3 will be $800,000. Without the new computer, sales in each year will be $400,000. Operating expenses will be 50% of sales with the new computer, they are 60% of sales with the old computer. The new computer will be depreciated using the 3-year MACRS schedule Cyr. 1: 33%;yr. 2: 45%;yr. 3:15%;yr. 4:7%). The new computer will be sold, however, after three (3) years for $100,000 The UFRO Company has a cost of capital of 8%. CALCULATE THE NPV, IRR, MIRR AND COMMENT ON WHAT GIVES YOU PAUSE WITH RESPECT TO YOUR INVESTMENT DECISION