Assume that your company is considering a new project and has collected the following

information about the project. $($Note: You may or may not need to use all of this information,

use only the information that is relevant.$)$

$$ The project has an anticipated economic life of $6$ years.

$$ The company will have to purchase a new machine. The machine will have an up$-$front cost

of $$1\mathrm{.}8$ million at Year $0.$ The machine will be depreciated on a straight$-$line basis over $6$

years. The company anticipates that the machine will last for six years, and that after six

years, its salvage value will equal zero.

$$ If the company goes ahead with the proposed product, it will have to invest $$1$ million in

NWC in Year $0.$

$$ At Year $6,$ the net operating working capital will be recovered after the project is completed.

$$ You believe you will be able to sell $1$ million units of your product at $$7$ per unit. It costs $$2$

per to produce each unit. And the project has fixed yearly expenses of $$4$ million.

$$ The company$$s interest expense each year will be $$100,000.$

$$ The new project is expected to reduce the after$-$tax cash flows of the company$$s existing

products by $$100,000$ a year but only in Years $1-3.$

$$ The company$$s overall WACC is $10$ percent. However, the proposed project is riskier than

the average project and the project$$s WACC is estimated to be $12$ percent.

$$ The company$$s tax rate is $20$ percent.

What information is not necessary when determining free cash flows? Why?

What free cash flows does this project generate?

Determine the NPV and IRR for this project. PLEASE ONLY ANSWER IF YOU CAN SHOW EXCEL WORK. THANK YOU