Acme Toy Company is considering the purchase of a machine for their production line.

Information on the purchase is shown below. show working in xl

Purchase Information:
1. Cost of machine is	$ 3000000
2. Expected increase in EBIT is	$ 700000
3. Training costs for new machine	$ 225000
4. Increase in inventory for new parts	$ 375000
5. Salvage value of machine	$ 300000
6. Expected life of machine - 10 years, use straight line depreciation.
7. Tax Rate - 35%	35%
8. Required Rate of Return	12%

a. Calculate the initial outlay associated with the project.

b. What is the annual after tax cash flows for years 1-9?

c. What is the terminal cash flow in year 10?

d. Should the machine be purchased? (Do an NPV)