Jensen Company produces cars. This company is required by law to buy a machine to recycle waste oil. This project requires an years . investment of $450,000. The project is expected to produce recycled oil and generate cash flows of $125, 000 per year for five The cash flows would be received at the end of each year. The asset is considered 5-year property for depreciation purposes with zero salvage value. The machine would be disposed of on the first day of the fourth year, at which time it would have $110,000 salvage value. Assume the required rate of return is 8 percent and the income tax rate is 40 percent. Required : a. Determine the net present value of the asset. ( Round to the nearest dollar. ) ( 10 marks) b. State your recommendation should Jensen buy the machine? Explain (1 mark) year discounted factor 8% 7 0.926 2 0.857 3 0.794 4 0.735 0.681 0.630