Nate Long, a manager of the Plate Division for the Red Dog Manufacturing company, has the opportunity to expand the division by investing in additional machinery costing $495,000. He would depreciate the equipment using the straight-line method and expects it to have no residual value. It has a useful life of 9 years. The firm mandates a required after-tax rate of return of 14% on investments, Nate estimates annual net cash inflows for this investment of $130,000 before taxes and an investment in working capital of $5,000 that will be returned at the project's end. Red Dog's tax rate is 30% Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements 24% Present Value of $1 Periods 2% 4% 6% 8% Period 1 0.980 0.962 0.943 0.926 Period 2 0.961 0.925 0.890 0.857 Period 3 0.942 0.889 0.840 0.794 Period 4 0.924 0.855 0.792 0.735 Period 5 0.906 0.822 0.747 0.681 Period 6 0.888 0.790 0.705 0.630 Period 7 0.871 0.760 0.665 0.583 Period 8 0.853 0.731 0.627 0.540 Period 9 0.837 0.703 0.592 0.500 Period 10 0.820 0.676 0.558 0.463 Period 11 0.804 0.650 0.527 0.429 Period 12 0.788 0.625 0.497 0.397 Period 13 0.773 0.601 0.469 0.368 Period 14 0.758 0.577 0.442 0.340 Period 15 0.743 0.555 0.417 0.315 Period 16 0.728 0.534 0.394 0.292 Period 17 0.714 0.513 0.371 0.270 Period 18 0.700 0.494 0.350 0.250 Period 19 0.686 0.475 0.331 0.232 Period 20 0.673 0.456 0.312 0.215 Period 21 0.660 0.439 0.294 0.199 Period 22 0.647 0.422 0.278 0.184 Period 23 0.634 0.406 0.262 0.170 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149 0.135 0.123 0.112 12% 14% 0.893 0.877 0.797 0.769 0.712 0.675 0.636 0.592 0.567 0.519 0.507 0.456 0.452 0.400 0.404 0.351 0.361 0.308 0.322 0.270 0.287 0.237 0.257 0.208 0.229 0.182 0.205 0.160 0.183 0.140 0.163 0.123 0.146 0.108 0.130 0.095 0.116 0.083 0.104 0.073 0.093 0.064 0.083 0.056 0.074 0.049 16% 18% 20% 22% 26% 28% 0.862 0.847 0.833 0.820 0.806 0.794 0.781 0.743 0.718 0.694 0.672 0.650 0.630 0.610 0.641 0.609 0.579 0.551 0.524 0.500 0.477 0.552 0.516 0.482 0.451 0.423 0.397 0.373 0.476 0.437 0.402 0.370 0.341 0.315 0.291 0.410 0.370 0.335 0.303 0.275 0.250 0.227 0.354 0.314 0.279 0.249 0.222 0.198 0.178 0.305 0.266 0.233 0.204 0.179 0.157 0.139 0.263 0.225 0.194 0.167 0.144 0.125 0.108 0.227 0.191 0.162 0.137 0.116 0.099 0.085 0.195 0.162 0.135 0.112 0.094 0.079 0.066 0.168 0.137 0.112 0.092 0.076 0.062 0.052 0.145 0.116 0.093 0.075 0.061 0.050 0.040 0.125 0.099 0.078 0.062 0.049 0.039 0.032 0.108 0.084 0.065 0.051 0.040 0.031 0.025 0.093 0.071 0.054 0.042 0.032 0.025 0.019 0.080 0.060 0.045 0.034 0.026 0.020 0.015 0.069 0.051 0.038 0.028 0.021 0.016 0.012 0.060 0.043 0.031 0.023 0.017 0.012 0.009 0.051 0.037 0.026 0.019 0.014 0.010 0.007 0.044 0.031 0.022 0.015 0.011 0.008 0.006 0.038 0.026 0.018 0.013 0.009 0.006 0.004 0.033 0.022 0.015 0.010 0.007 0.005 0.003 AAN AA AAAA 0.00 AA nn AR 1. Calculate the net present value of this investment. 2. Calculate the accrual accounting rate of return on initial investment for this project. 3. Should Nate accept the project? Will Nate accept the project if his bonus depends on achieving an accrual accounting rate of return of 14%? How can this conflict be resolved? Requirement 1. Calculate the net present value of this investment. (Use factors to three decimal places, Xxxx, and round all currency calculations to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value) The net present value of this investment is. Requirement 2. Calculate the accrual accounting rate of retum (AARR) based on net initial investment. (Round interim calculations to the nearest wholo doilar. Round the rate to two decimal places, XXX%.) The AARR is % Requirement 3. Should Nate accept the project? Will Nate accept the project if his bonus depends on achieving an accrual accounting rate of return of 14%? How can this conflict be resolved? Nate accept the project if he is being evaluated based on the accounting rate of return, because the project the 14% threshold above which Nate earns a bonus. Nate accept the project if he wants to act in the firm's best interest because the NPV is implying that, based on the cash flows generated, the project the firm's required 14% rate of return Nate will an To resolve this conflict, the firm should long-run project to avoid a poor evaluation based on the measure used to evaluate his performance, which impacts his bonus by