Need help with cash flows economics problem

Problem 10.52 (20 points). USA Aluminum Company is considering making a major investment of $150 million (S5 on for land, $45 million for buildings, and S100 million for manufacturing equipment and facilities) to produce a stronger, lighter material, called aluminum lithium, that will make aircraft sturdier and more fuel efficient. Aluminum lithium has been sold commercially as an alternative to composite materials for only a few years. It wil likely be the material of choice for the next generation of commercial and military aircraft becauset is so much lighter than conventional aluminum alloys. Another advantage of aluminum lithium is that is cheaper than composites. The firm predicts that aluminum lithium will account for about 5% of the structural weight of the average cormmercial aircraft within 5 years and 10% within 10 years. The proposed plant, which has an estimated service life of 12 years, would have a production capacity of about IO million pounds of aluminum lithium, althouglh domestic consumption of the material is expected to be only 3 lion pounds during the first four years, five million for the next three years, and eight mlion for the remaining plant life. Aluminum lithium costs S15 a pound to produce, and the firm would expect to sell it at S28 a pound. The building. which will be placed in service on July 1 of the first year, will be depreciated according to the 39-year MACRS realproperty class. All manufacturing equipment and faciliies will be classified as seven-year MACRS property. At the end of project life, the land will be worth $8 million, the building S30 million, and the equipment $10 million. The firm's marginal tax rate is 40%, and its capital gains tax rate is 35%. (a) Determine the net after-tax cash flows. (b) Determine the IRR for this investment. April 18, 2018 Version 6.0 (c) Determine whether the project is acceptable if the firm's MARR is 15%