Please do work in excel with formulas. The Cookie Company is considering adding a new automated baking machine to its production floor. The machine's base price is $1,720,000, and it would cost another $80,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $800,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $75,500. The machine would not change revenues, but it is expected to save the firm $420,000 per year in before-tax operating costs, mainly labor. Their marginal tax rate is 27%.

What is the Year-0 cash flow?

What are the cash flows in Years 1, 2, and 3?

What is the additional Year-3 cash flow (i.e., the after-tax salvage and the return of working capital)?

If the projects cost of capital is 10%, what is the NPV?

Should you pursue this project?