Investment Analysis for New Equipment:

Details	New Equipment
Initial Investment	$4,000,000
Expected Life	5 years
Annual Income	$1,000,000
Annual Expenses	$300,000
Depreciation	Straight Line

The cost of capital is 12%, and the tax rate is 28%.

Requirements:

1. Calculate the Depreciation Expense per year.
2. Compute the Annual Net Cash Flows.
3. Determine the NPV.
4. Calculate the IRR.

Recommend whether to proceed with the purchase.