3. Mac Inc. is weighing a proposal to manufacture a new device that will monitor blood pressure during surgery, the expected life of this project is 5 years. Mr. Alden, the financial manager of Mac Inc, expect that the unit sales for this new device in the future five years are as follows: 1 Year Unit sales 2 600,000 3 740,000 4 800,000 5 700,000 450,000 The installed cost of equipment is $4,800,000, the tax law allows this equipment depreciate to zero over 8 year using straight-line depreciation method. Mr. Alden expects this equipment can be sold for about $1,200,000 at the end of the project. In addition, production of the project will require $700,000 in net working capital to start and additional new working capital investments each year equal to 10% of the projected sales increase for the following year. Total fixed costs are $1,600,000 per year, variable production cost are $13 per unit, and the units are priced at $20 each. The marginal tax rate of Mac Inc. is 35% and the require return on the project is 20%. Required: 1). Calculate the net capital spending in last year. (5 marks) 2). Calculate the cash flow from asset for each year. (10 marks) 3). Calculate the net present value and Payback period of the project. (6 marks) 4). Should Mac Inc. accept the project? Why? (2 marks)