American Industrial Machines, (AIM) supplies hard to find components and replacement parts for industrial machinery such as the Brown & Sharpe Multi-Spindle Screw Machine that is no longer in productionAIM is considering starting a new division dedicated to creating custom 3D printed parts for its customers. To do this they will require investments in a building addition and new equipment AIM executives have asked for your help in evaluating this opportunity. Evaluate the investment worthiness of this project by building the Income and cash flow statements and calculating the net present worth of this investment opportunity AIM's engineering team has determined the following will be required for this new division Renovations and extension of the existing production facility required to house this new division and production equipment will cost $1,250,000. These investments will be depreciated along with investments in equipment. Purchase of 3D printing equipment will cost $945,500 Equipment and the building renovations will be depreciated according to a 7-year MACRS schedule This division is expected to be in use for the next 5 years. At the end of this time, the building additions and equipment will have negligible salvage values They will need to finance 75% of this purchase through a bank loan. This loan has an 11% interest rate will be repaid in equal annual installments for the next 5 years Every years, AIM will need to make a significant overhaul of the 3D printing equipment to replace worn out parts and ensure the equipment is in the best working condition. Each overhaul is expected to cost $45,000 . The first overhaul is expected to take place in year 2 Once the new division is operationalanticipates the following: They will produce 550 parts per year, resulting in $657 in new revenue The materials, labor, and overhead associated with producing these parts is $18.74 per unit produced They anticipate that annual operating and maintenance costs will be $115,000 per year An investment of $78,000 in working capital is required at the start of this project. This amount will be fully recovered at the end of this project period ie end of year ). Other useful information AIM's federal and state marginal tax rates are 21% and 9.2% respectively. AIM's interest rate ( MARR) 15%