Note: I need handwritten with explanation only I don't want in excel format.

Please quick as possible only 2 hours left after 2 hours useless for me. Thank you so much in advance

Case:

Mayco, Inc. would like to set up a new plant (expand). Currently, Mayco has an option to buy an existing building at a cost of $24,000. Necessary equipment for the plant will cost $16,000, including installation costs. The equipment falls into a MACRS 5-year class. The building falls into a MACRS 39-year class. The project would also require an initial investment of $12,000 in net working capital. The initial working capital investment will be made at the time of the purchase of the building and equipment. The projects estimated economic life is four years. At the end of that time, the building is expected to have a market value of $15,000 and a book value of $21,816, whereas the equipment is expected to have a market value of $4,000 and a book value of $2,720.

Annual sales will be $80,000. The production department has estimated that variable manufacturing costs will total 60% of sales and that fixed overhead costs, excluding depreciation, will be $10,000 a year [costs: (0.60)80,000 + 10,000 = 58,000]. Depreciation expense will be determined for the year in accordance with the MACRS rate.

Maycos marginal federal-plus-state tax rate is 40%; its cost of capital is 12%; and, for capital budgeting purposes, the companys policy is to assume that operating cash flows occur at the end of each year. The plant will begin operations immediately after the investment is made, and the first operating cash flows will occur exactly one year later.

The MACRS table is given below:

1. Compute the initial investment outlay. Also provide explanation of working.

2. Compute the Operating cash flow over the projects life. Also provide explanation of working.

3. Compute the terminal year cash flows for Maycos expansion project. Also provide explanation of working.

4. Determine whether the project should be accepted using NPV and IRR analysis. Also provide explanation of working.

Year Seven-Year 1 2 3 4 5 6 7 8 Property Class Three-Year Five-Year 33.33% 20.00% 44.44 32.00 14.82 19.20 7.41 11.52 11.52 5.76 14.29% 24.49 17.49 12.49 8.93 8.93 8.93 4.45