I work in a company that produces cars and we are considering purchasing a new automated assembly machine. The machine has an initial cost of $500,000 and an estimated useful life of 5 years. The expected salvage value at the end of 5 years is $100,000. The machine is expected to generate annual net cash flows of $150,000. The company's required rate of return is 10%.

Use cash flows and capital budgeting to decide if the asset should be purchased. Show the calculations and explain work please.