Fisher and Paykel Company is considering purchasing a new machine, costing $2,000,000 today. The investment is forecasted to have revenue in the first year of $600,000. Revenue is projected to decrease at 5% p.a., and the operating cost is 20% of annual revenue. The life the machine is 5 years after which it is expected to be sold only for 5% of the original cost. The purchase of the machine is financed 60% through debt which has a cost of 10% p.a. and shareholders expect a 15% p.a. return a) Draw the timeline and set out net cash flows by year. [4 marks] E Calculate the weighted average cost of capital (WACC) of this project. [2 marks] c) Calculate the Net Present Value (NPV) of this project. Explain if the project should be accepted according to NPV decision rule. (4 marks] d) Calculate the Internal Rate of Return (IRR) of this project. Explain if the project should be accepted according to IRR decision rule. [3 marks] e) If the credit rating of Fisher and Paykel unexpectedly changed from AA to BBB, holding everything else being equal D) Explain how this change would affect the WACC of the project. [3 marks] ii) Given your answer to part e) i), explain the impact this would have on the NPV and IRR of this project and the capital budgeting decision made by using the two approaches? (4 marks]