In Australia, a business is deciding whether to build a new vaccine manufacturing facility. The vaccination is currently available for $9 apiece on the open market. According to a feasibility assessment, the development expenses for a facility capable of producing 30 million vaccinations per year include $15 million for a production facility (building, plant, and equipment) and $700,000 for land.The facility will be operational for 20 years. The Australian government is granting the firm a 10-year (straight-line) accelerated depreciation for the new facility.

All equipment in the facility will be removed at the end of the project's life, and it will be refurnished as a warehouse for $1.9 million, after which the building and site will be sold for $5.5 million a year later (Ignore Capital Gains Tax).The new vaccine's direct production costs (labour, materials, and electricity) are anticipated to be $5 per vaccination, with annual fixed operating expenses of $4.5 million. The corporate tax rate is 30%, and the marginal rate of return is 15%.

a) Calculate the annual net operating cash flow applicable over the life of the project

b) Draw the after-tax cash flow diagram .

c) Carry out a net present value assessment of the project and determine if you would recommend the investment .

d) What is the advantage of the declining balance method of depreciation verses the straight-line method ?