Bristol Company (BC) wants to purchase a new machine costing $500,000 which will last 12 years to make Drones - a new product. Because BC deals in products that are consumer oriented where tastes change rapidly, they assume a useful life for their products of 5 years. This machine could be sold for $200,000 at the end of Year 5 or for $50,000 at the end of 12 years. . Bristol will have to increase its inventory and accounts receivable by $150,000 at the beginning of year 1 and by an additional $50,000 at the beginning of Year 2. They can recover only $150,000 of this working capital investment at the end of Year 5. Assume all of the following cash inflows occur at the end of the year. The new product revenues are expected to be as follows: Year 1 $400,000 Year 2 $500,000 Year 3 $700,000 Year 4 $700,000 Year 5 $300,000 . Cash outflows for the production of the Drones will be 50% of revenues in Years 1, 2, and 3 and 60% of revenues in Years 4 and 5. . BC will spend $100,000 on an advertising campaign in Year 1 . An additional $20,000 will be spent on advertising each year for years 2-5 (treat as an annuity) . As part of the decision whether to make the Drones, BC spent $100,000 on a preliminary market study last year. The machine will be in a CCA class where the rate is 20% . Taxes are 40% and Bristol requires 10% rate of return.REQUIRED: Should Bristol Company purchase this new machine? Include a calculation of the net present value, margin of safety and discounted payback. Also include qualitative points that should be considered. Show all calculations. Formulas: CCA Tax Shield Cdt X 1+.5 k d+k 1+k Lost Tax Shield (Salvage) sdt X PVIF (k%, n years) d+k