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Lee's Fabulous Foods incorporated is plannine to add a new line of noodles that will require the acquisition of new procesting equlprient. The equipment will

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Lee's Fabulous Foods incorporated is plannine to add a new line of noodles that will require the acquisition of new procesting equlprient. The equipment will cost \$1.000.000, including installation and shipping. It will be depreciated straight-line to a zero value over the 10-year economic life of the project. The expected salvage value of the machine at the end of 10 years is $200,000 One year ago, a market survey was performed to gauge the likely success of this new project. The survey cost 525,000 and was paid last year. If this new equipment is acquired, it wililalso allow the replacement of old equipment. This old equipment can be salvaged for 5150,000 and has a book value of 5200.000 . Additional net working capital of 585,000 will be needed immediately. Lee expects to sell $300.000 worth of this new pasta annually. The cost of producing and selling the pasta is estimated to be $50,000 annually. The tax rafe as 403 and assume 100 of intemst rate. 1 Compute the net imvestinent 2 Compute the net cash flow for the first year. 3. Compute the Terminal Non-Operating Cash Flow. 4. Compulf the total net cash flow for the final year (year 10). 5. Compute NPV. 6. Will you accept this capital budgeting project? Explain your decision

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