(Calculating project cash flows and NPV)Raymobile Motors is considering the purchase of a new production machine for$ 450000.The purchase of this machine will result in an increase in earnings before interest and taxes of$ 120000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost$ 21000 after tax. In addition, it would cost $4000 after tax to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase in inventory of $22000.This machine has an expected life of 10 years, after which it will have no salvage value. Assume simplified straight-line depreciation, that this machine is being depreciated down to zero, a 31 percent marginal tax rate, and a required rate of return of 14 percent.

a.What is the initial outlay associated with this project?

b.What are the annual after-tax cash flows associated with this project for years 1 through 9?

c.What is the terminal cash flow in year 10 (that is, the annual after-tax cash flow in year 10 plus any additional cash flows associated with termination of the project)?

d.Should this machine be purchased?