5.1 Acai, a company specializing in developing Al technology in food transportation systems, wants to invest in a hardware system for their new office. Listed below is the economic data for the investment: $ $ $ $ $ $ 1 2 3 4 5 6 7 8 9 10 11 12 Depreciable Capital - year 0 Salvage Value (FMV) (at the end of project life) Non-depreciable Capital - year 0 Non-depreciable Capital (at the end of project life) Expected Revenue ($ / yr.) O&M Cost ($ / yr.) Useful life (years) Working Capital - year 0 Working Capital - (at the end of the project life) Loan Proceeds - year 0 Interest on Loan - per year Loan Period - years Tax rate - per year ITC - year 1 ITC - year 2 MARR per year $ $ $ 500,000 90,000 90,000 170,000 1,800,000 300,000 2 250,000 250,000 650,000 10% 2 25% 90,000 120,000 20% 13 14 15 16 $ $ This system qualifies as a special 2-year MACRS Depreciation (with factors 0.6 and 0.4). Assume that the working capital is returned in year 2. Assume that the company has income from other projects and this system is sold at the end of year 2. Note: Use the following tables to calculate the above values. a) Calculate the interest and principal repayments for the loan. [6 points] Beginning Annual Principal Year Interest Ending Balance Balance Payment Repayament 1 2 Total b) Find the depreciation expenses and accumulated depreciation expenses (using the special MACRS rate) for this system. [5 points) Depreciation Depreciation Year Accumulative Initial Cost Ending BV Rates Expenses Depreciation 0 1 2 Total c) Calculate the after-tax cash flows from salvage of depreciable and non-depreciable capital. [6 points] Depreciable Taxes = After Tax Cash Flows = Non-Depreciable Taxes = After Tax Cash Flows =