=Diltz Farms is considering investing in an automated egg-sorting system to increase production for international (web-based) sales of Diltz Farms' products. The new system will cost $2644 including installation. It will be fully depreciated in 5 yrs.(straight-line) to zero and generate $114 after-tax gain at the end of the projected period (year 6). The initial working captital will be $237 and will be $615 in year one and increase each year thereafter by 5 percent.Assume that at year 0, there is no change in working capital. Revenues generated from the egg-sorter are expected to be $1119 in year one, and increase by five percent each year. Expenses are ten percent of revenues. Diltz Farms' cost of capital is 6.7%. Using the discounted cash-flow analysis, should Diltz Farms invest in the machinery? What is the NPV of the egg-sorter project? Asume Tax rate as 35%"

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Cost of the Asset

Life of the Asset in Years

Book Value of the Asset after 5 years

Depreciable Basis

Yearly depreciation

After tax Salvage Value in year 6

Cost of capital

Tax rate