Baldwin Company is considering an investment project. The company will use an existing factory currently valued at $150,000. The company will buy a machine priced at $100,000 (depreciated according to MACRS 5-year: 20%, 32%, 19.20%, 11.52%, and 11.52%). The machine has a salvage value of $30,000. Other expenses are as follows:

17. An initial increase in NWC is $10,000.
17. Production (in units) by year during the 5-year life of the machine: 5,000, 8,000, 12,000, 10,000, 6,000.
17. Price-per-unit during the first year is $20; price increases 2% per year thereafter.
17. Production costs during first year are $10 per unit and increase 10% per year thereafter.
17. Working Capital: initial $10,000 changes with sales
    17. NWC at the end of each year equals 10% of sales that year.
17. Baldwins tax rate is 21%.
17. Baldwins cost of capital is 10%.

Should the company accept the project? Why? Please complete the Capital Budgeting table below:

Baldwin Companys Capital Budgeting Table

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

	$100.00	163.20	249.702	212..24	129.89
	(50.00)	(88.00)	(145.20)	(133.10)	(87.75)
	(6.30)	(9.07)	(17.91)	(14.20)	(6.41)

Sales Revenue

Operating Costs

Taxes OCF

CF of Investment

IATCF

ANSWER