A company is evaluating the purchase of a machine to improve product quality and output levels. The new machine would cost $$811,000$ and would be depreciated for tax purposes using the straight$-$line method over an estimated six$-$year life to its expected salvage value of $$50,000.$ The new machine would require an addition of $$45,000$ to working capital at the beginning of the project, which will of course be returned to the firm at the end of the project.

The machine would increase the company's'annual pre$-$tax cash receipts by $$247,000$ from their current level. Cash operating costs pertaining to the machine will be $$17,000$ per year. In addition, at the end of the $4$th year, a major repair of the machine costing $$30,000($pretax$)$ would be required. The company has an overall cost of capital of $11\%,$ and is in the $35\%$ marginal tax bracket.

Required:

A$.$ Prepare a cash flow spreadsheet that identifies and summarizes the incremental cash flows for each year of the machine's life.

B$.$ Calculate the machine's net present value.

C$.$ Calculate the machine's internal rate of return.

D$.$ Based on your analysis, should the firm purchase the machine?