P2. Rose is considering purchase of the bakery near her house (the owner of which is retiring). The seller's asking price is $120.000 for the equipment. If purchased, Rose has to tie up $6,000 in inventory which will be released at the end of project. The bakery equipment requires two major overhauls in year 7th and year 12th each costing $7,000, and $8,500, respectively. Rose is thinking to hold the business for 18 years. At the end, she will be able to sell the remaining for $25,000. The projected cash revenues and cash expenses for 18 years are provided below. Rose's cost of capital is 12%. Requirements: 2. Compute Net Present Valve and Internal Rate of Return of the proposed project and place your answers in the space provided below Ignore income taxes b. Assume Rose's applicable income tax rate is 28%. The applicable depreciation rates under MACRS for this machine is stated below. Compute Net Present Value and Internal Rate of Return of the proposed project and place your answer in the space provided below c. Based on your computation in the above, should Rose invest on this project? Why? Put your answer in the space provided on the 7 Answers Sheet 8 0 Data: 11 Cost of capital 12 Investment in Equipment 13 Increase in Working Capital 14 Salvape value 15 Income Tax Rate 16 17 18 Overhaul cost in 7th year 19 Overhaul cost in 12th year 20 12% $120,000 $6,000 $25,000 28% 3 year Depreciation Rates year 26 2594 year 22.19% 16.52% year 16.32% year 16.52% year 2.06% Total 10098 $7,000 $8,500