#5 (27 points) Given the following information, calculate the NPV and IRR of a proposed machine purchase for Nittany Lions Corporation: Cost = $1,100,000 Estimated useful life = 3 years. Increase in net operating working capital of $100,000 at year 0; this will be recovered at the end of year 3 when the company sells the used machine. Estimated selling price for the used machine after 3 years is $85,000. Additional Earnings before taxes and depreciation from using this machine (i.e., additional EBITDA) = $515,000 per year. There is no inflation. Two years ago the company spent $50,000 to see if there was sufficient demand for the product Method of depreciation = MACRS (with the 3-year schedule below). (Note that MACRS depreciation begins in year 1.) Cost of capital (required return) = 12 percent. Income Tax rate = 30 percent. (Any capital gains are also taxed at 30% rate.) MACRS Depreciation Schedule year Depreciation% 1 33.33% 2 44.45% 3 14.81% 4 7.41%