a) HydraJems has just replaced a set of hydraulic screens that had been in operation for 6 years with a newer screening system that cost $180,000 installed. The old system cost $140,000 and had been depreciated as a 10-year MACRS asset. Its salvage value is $10,000.

What is the NINV for the new equipment? Assume a 40% tax rate. Use the rounded MACRS schedule listed below:

(Note: 10-Year Depreciation Schedule: 10%, 18%, 14%, 12%, 9%, 7%, 7%, 7%, 7%, 6%, 3%)

b) ABC Limited Company is looking to invest in aproject. The cost of that project is $60,000 and the cash inflows and outflows of the project for 5 years, are shown in Table 1 below. The companys WACC is 7%.

Years Cash Inflows Cash Outflows

0 (Initial Outlay) $60,000.00

1 $20,000.00 $5,000.00

2 $21,000.00 $2,000.00

3 $22,000.00 $2,000.00

4 $14,000.00 $2,000.00

5 $10,000.00 $1,000.00

Calculate the

i. Profitability Index (PI)

ii. Net Present Value (NPV), and estimate the Internal Rate of Return (IRR) of the Project using the given interest rate and 9%.