Project Y involves a new type of machine used in manufacturing automobile dashboard frames.Your manager expects to sell 5,000 units per year at a price of $300 per unit.Variable cost will run at $150 per unit.Fixed costs for the project will run at $300,000 per year.This project will have a 3 year life.

The machine will cost $1,000,000 and will be depreciated using 5-year MACRS.After 3 years, the machine will be worth $500,000.

The MACRS depreciation rates are as follows:

Yr 1.20;Yr 2.32;Yr 3 .192;Yr 4 .1152;Yr 5 .1152;Yr 6 .0576

Net working capital will increase initially by $200,000.The tax rate is 30% and the cost of capital is 16%.

Please show all work, if financial calculator was used please show specific steps and if arithmetic was used please show specific step. Avoid solving problem through excel or tables.

a.) Calculate the initial outlay for Project Y.

b.) Calculate the incremental after-tax operating cash flow for year 1.

c.) Calculate the net proceeds from the sale of the machine at the end of year 3.

d.) Suppose the OCF for years 2 and 3 are $420,000 and $437,000, respectively.Show all project cash flows on a timeline.Then calculate NPV and IRR.