a) Boulder Milling is evaluating a proposal to invest in a new piece of equipment costing $160,000 (salvage value = $10,000) with the following annual cash flows over the equipment's 4-year useful life. There is an initial working capital payment of $50,000 required for this equipment.

Cash revenues Cash expenses Depreciation expenses (straight-line) Income provided from equipment Cost of capital Note: Depreciation is a non-cash expense

$120,000 (64,000) (20,000)

$36,000 12 percent

Periods	Present value of $1
	8%	10%	12%
Year 1	0.926	0.909	0.893
Year 2	0.857	0.826	0.797
Year 3	0.794	0.751	0.712
Year 4	0.735	0.683	0.636

a) (Show work) Calculate the present value, net present value and internal rate of return of the investment (Points 10.0)? Using the answer from a), is your recommendation to proceed with the project? Why or why not. (Points 2.5)?

b) if prices rise and Boulders initial investment increases to $175,000, calculate the net present value and internal rate of return. Should they proceed with the investment? Why or why not