Peppers Enterprise has just begun running:

Peppers Enterprise requires to evaluate a new machine hardware with the following elements:

-Acquiring a machine hardware for a cost of $2,500,000.

-The machine hardware has an expected six-year life.

-The initial investment in net working capital (in Year 0) is $500,000. The investment in working capital is to be completely recovered by the end of the projects life (in Year 6).

-The machine hardware can be depreciated on a straight-line (prime cost) basis and there is no expected salvage value after six years.

-The produced software is expected to generate sales of $1,250,000 in Year 1. They grow at a 25% annual rate for the next two years, and then grow at a 10% annual rate for remaining years.

- Fixed operating expenses are $100,000 for Years 1-3 and $110,000 for Years 4-6.

-Variable operating expenses are 20% of sales in Years 1-2 and 25% of sales in Years 3-6.

-Pepper's does not have any available space where the project can be located for six years and you anticipate to rent the required office space it would cost $65,000 per year for the life of the project. You expect that the project will need to hire three new software specialists at $50,000 (each specialist) per year (start in Year 1) for the full six years to work on the software.

-The project will use a truck currently owned by Pepper. Although the truck is not currently being used by Pepper, it can be rented out for $20,000 per year for six years. The book value of the truck is $20,000. The truck is being depreciated straight-line (with six years remaining for depreciation) and is expected to be worthless after the sixth year.

-Pepperss marginal tax rate is 35%, and the discount rate is 11.5%.

With the above information do not use excel use word doc and complete the questions;

Calculate the incremental free cash flow during the projects life (starting from Year 0 to Year 6). Show all working out for how each figures were calculated.