ACX Company has the opportunity to increase its sales by purchasing a new piece of equipment. The equipment costs $350,000 today. It is being added to a large tax pool of equipment with a capital cost allowance (CCA) rate of 30%. If this equipment is purchased, sales are expected to increase by $250,000 per year for the next 5 years. Costs and expenses will also increase by $75,000per year.During the life of the project, it is expected that there will be a change in net working capital. There is an immediate increase of $100,000 in net working capital, and a further $50,000 increase at the end of year 1. The net working capital changes are assumed to return to their original levels at the end of the project.ACX has a debt cost of capital of 6%, and its currentlevered beta is1.4. The company has a debt-equity ratio of 60%, but ACX wishes to finance the project with a debt-equity ratio of 150%. ACX Companys effective corporate tax rate is 40%. This project is independent of other company projects. The current market treasury bill rate is 3%, and the market risk premium is 10%

.a) Use the APV method to calculate the NPV of this project. (4 marks)

b) Use the FTE method to calculate the NPV of this project. (4 marks)