Advanced Technology Ltd is considering the various benefits that may result from a shortening of its production cycle time by changing from the companys present manual system to a computer-aided manufacturing design/computer-aided manufacturing (CAD/CAM) system. The annual cash expense of maintaining the current manual system is $300,000.

The annual cash expense of maintaining the new CAD/CAM system is estimated to be $180,000, with the initial investment of $445,000. The estimated life of the new CAD/CAM system for taxation purposes is 5 years with zero salvage value.

The taxation rate is 30% and Advanced Technology will use straight-line depreciation method for both accounting and tax purposes. Advanced Technology requires a minimum after-tax rate of return of 14 per cent.

Required:

1. Calculate the following:
   1. After-tax cash flow and after-tax profit.
   2. Payback period.
   3. Net present value.
   4. Internal rate of return.
   5. Accounting rate of return.
2. Beyond the above financial concerns, what other factors should the firm take into account when review this proposal?
3. Overall, should the investment go ahead and why?