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 project’s 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.
• Peppers’s marginal tax rate is 35%, and the discount rate is 11.5%.

With the above information please construct a table using word doc not excel

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

2.Calculate the net present value, payback period and internal return of rate of the project. Should the project be accepted? Show workings and explain your answer(s).