ABC Corp. is considering the purchase of another machine as an alternative to Project A. a. The cost of the new Calculate the NOCFs for Project B. machine is $210,000. 1. Delivery and Installation will cost $40,000. c. The company spent $60,000 building a new parking lot last year. d. The project will require an immediate increase in working capital of $10,000; the working capital will be fully recaptured at the end of the life of the project. e. The project will increase annual revenues by $95,000 and annual operating costs by $35,000. f. The project has an estimated life of five years. The machine will be 100% depreciated via simple straight-line depreciation to a book value of $0.00. i. The company is using SIMPLE straight line depreciation ii. However, similar machines outlive the IRS depreciation period and on average have a salvage value of $20,000 after 5 years of use. The company assumes the same for their machine. h. The Firm expects to sell their current old machine as scrap parts for $5,000 which has been fully depreciated to a book value of $0.00 i. Assume a 14% WACC and 35% marginal tax rate. 8 1. Now use the Net Operating Cash Flows (NOCFS) you just calculated above to make the decision based on the projects Net Present Value. The WACC = 14%. (6 Points) Year 4. Based on the PV of all CFS (RRR = 14%) Net Operating Cash Flows (NOCE) NPV you 0 calculated above, should ABC Corp. accept the project? Why? (4 Points) 1 2 3 4 5 Sum of all Present Values (The NPV)