PROBLEM 3 DCF, accrual accounting rate of return, working capital, evaluation of performance Century Lab plans to purchase a new centrifuge machine for its New Hampshire facility. The machine costs $137,500 and is expected to have a useful life of 8 years with a terminal disposal value of $37,500. Saving in cash operating costs are expected to be $31,500 per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of $10,000 needs to be maintained at all times, but this investment is fully recoverable ( will be cash-in) at the end of the useful life. Century Lab's required rate of return is 14%. Ignore income tax in your analysis. Assume all cash flows occurs at year-end except for initial investment amounts at the beginning of the year. Century lab uses straight line depreciation for its machine. return on the initial investment, which is below the required rate. Your reluctance to make a "buy" decision would be quite natural unless you are assured of reasonable consistency between the decision model and the performance evaluation method