Integrative: Complete Investment decision$$Wells Printing is considering the purchase of a new printing press. The total installed cost of the press is $ $2\mathrm{.}15$ million. This outlay would be partially offset by the sale of an existing press. The old press has zero book$$ value, cost $ $0\mathrm{.}93$ million $10$ years$$ ago, and can be sold currently for $ $1\mathrm{.}17$ million before taxes. As a result of acquisition of the new$$ press, sales in each of the next $5$ years are expected to be $ $1\mathrm{.}64$ million higher than with the existing$$ press, but product costs$($excluding depreciation$)$ will represent $46\%$ of sales. The new press will not affect the$$ firm's net working capital requirements. The new press will be depreciated under MACRS $1$ using a$$ five$-$year recovery period. The firm is subject to a $40\%$ tax rate. Wells$$ Printing's cost of capital is $11\mathrm{.}3\%.($Note: Assume that the old and the new presses will each have a terminal value of $ $0$ at the end of year$6.)$

a$.$ Determine the initial cash flow required by the new press.

b$.$ Determine the periodic cash inflows attributable to the new press.$($Note: Be sure to consider the depreciation in year$6.)$

c$.$ Determine the payback period.

d$.$ Determine the net present value$($NPV$)$ and the internal rate of return$($IRR$)$ related to the proposed new press.

e$.$ Make a recommendation to accept or reject the new$$ press, and justify your answer.

Question content area bottom

Part $1$

a$.$ Determine the initial cash flow required by the new press.

Calculate the initial cash flow will$$ be:$($Round to the nearest$$ dollar.$)$

Installed cost of new press

$

Proceeds from sale of existing press

$

Taxes on sale of existing press

$

Total after$-$tax proceeds from sale

$

Initial cash flow

$

Part $2$

b$.$ Determine the periodic cash inflows attributable to the new press.$($Note: Be sure to consider the depreciation in year$6.)$

Calculate the periodic cash inflows attributable to the new press$$ below:$($Round to the nearest$$ dollar.$)$

Operating Cash Inflows

Year

$1$

Revenues

$

Expenses

$

Depreciation

$

Net profits before taxes

$

Taxes

$

Net profits after taxes

$

Operating cash inflows

$

Part $3$

$($Round to the nearest$$ dollar.$)$

Operating Cash Inflows

Year

$2$

Revenues

$

Expenses

$

Depreciation

$

Net profits before taxes

$

Taxes

$

Net profits after taxes

$

Operating cash inflows

$

Part $4$

$($Round to the nearest$$ dollar.$)$

Operating Cash Inflows

Year

$3$

Revenues

$

Expenses

$

Depreciation

$

Net profits before taxes

$

Taxes

$

Net profits after taxes

$

Operating cash inflows

$

Part $5$

$($Round to the nearest$$ dollar.$)$

Operating Cash Inflows

Year

$4$

Revenues

$

Expenses

$

Depreciation

$

Net profits before taxes

$

Taxes

$

Net profits after taxes

$

Operating cash inflows

$

Part $6$

$($Round to the nearest$$ dollar.$)$

Operating Cash Inflows

Year

$5$

Revenues

$

Expenses

$

Depreciation

$

Net profits before taxes

$

Taxes

$

Net profits after taxes

$

Operating cash inflows

$

Part $7$

$($Round to the nearest$$ dollar.$)$

Operating Cash Inflows

Year

$6$

Revenues

$

Expenses

$

Depreciation

$

Net profits before taxes

$

Taxes

$

Net profits after taxes

$

Operating cash inflows

$

Part $8$

c$.$ Determine the payback period.

The payback period for this project is

$$

enter your response here years. $($Round to one decimal$$ place.$)$

Part $9$

d$.$ Determine the net present value$($NPV$)$ and the internal rate of return$($IRR$)$ related to the