GmbH plan to exceed it's operation they have an option to buy an existential building of cost 10 million. equipment cost for the plant will cost 1.6 million with an additional installation cost of 400000. The project will be made at the time of purchasing building and equipment The project estimated economic life is 4 years at the end of that time building is expected to have a market value of 12 million. Selling the building will also cost a sum of 1 million in the form of real estate commission and expenses the equivalent is expected to have a fair market value of 500,000 It is anticipate that annual sales will be 1 million ( growth rate 5%) the production department has anticipated the variable manufacturer cost will be 50% of sale and fixed cost exclusive depreciation will be 100000 per year the company will use straight line method of depreciation however for tax following consult used Year 1 for equipment 20% for building 3.750% Year 2 for equipment 32% for building 7.219% Year 3 for equipment 19.20% for building 6.677% Year 4 for equipment 11.52% for building 6.177% Year 5 for equipment 11.52% for building 5.713% Year 6 for equipment 5.76% for building 5.285% Marginal tax rate is 40% and cost of capital stand at 15%. For capital budgeting company policy is to assume cash flow at the end of each year. The project will begin operation immediately after investment is made and first cash flow occur after exactly one year Required: compute initial investment outley, operating cash flow over the life of project and terminal year cash flow Should the company accept the project using NPV and profitability index analyst