Mumford Company is planning to upgrade and expand its product manufacturing and distribution facility equipment line. The cost of the upgrade is expected to be

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Mumford Company is planning to upgrade and expand its product manufacturing and distribution facility equipment line. The cost of the upgrade is expected to be $3,500,000. The equipment falls into the 7 year IRS depreciation range (use straight line full year every year). The upgrade is expected to reduce annual cash operating costs by $400,000 and allow new product lines to be built that will add $300,000 annually to cash earnings before tax cash flow. Mumford is in the 30% tax bracket and has decided to use a 12% hurdle rate, as a first pass, to examine the financial viability of the proposed project. At the end of year 4 one time software upgrade will be necessary. The cost is expected to be $80,000. This amount is fully tax deductible at the end of year 4. At the end of year 6 the used equipment is expected to be disposed of at a sell price equal to 20% of original cost. 1. Prepare a well-organized schedule that concludes with the calculation of the expected NPV from this project. 2. Is the IRR more or less than the 16% hurdle rate? How do you know? 3. Within a one point range (such as 4-5%) what is the project's IRR? 4. Which of the forecasted cash flow events is likely most susceptible to deviation between the forecasted outcome and the actual outcome