Calculate the following for a new project for ABC Tool and Die Company given the following set of assumptions: Investment in new equipment $5 million, no additional upfront working capital needed, additional revenue from the project of $2.5 million a year for 5 years, added operating expenses of $700,000 a year for 5 years, a tax rate of 25%, $1 million salvage value for the equipment at the end of the 5 year project, $250k in consulting costs paid last year, and a 5-year life for depreciation (straight-line depreciation method used). The company plans on taking a loan carrying a 5% annual interest rate to pay for the equipment. The cost of capital to be used for this project is 12%.

a) Annual cash flows by the year starting with year 0. The more work you show the greater chance for partial credit.

b) The project's undercounted Payback Period in years (rounded to 1 decimal point)

c) The Net Present Value of the project (in %, rounded to 0 decimal points)

d) The Internal Rate of Return of the project (in %, rounded to 0 decimal points)

e) The Benefit-Cost Ratio of the project (also known as the Profitability Index) (rounded to 2 decimal points)

f) If all company projects must pay themselves back in 3 years or less, would this project be approved? (Yes or No)

g) If the company uses NPV to approve projects and deems that this project is riskier than the cost of capital and that this project should be discounted at 16%, would this be approved? (Yes or No)