Riyadh Production Company is considering the purchase of a new machine to produce finished parts. The new machine costs $250,000 and is classified as 7-year MACRS property for tax purposes. The project is required for 4 years and the salvage value for the new system will be $75,000. Based on their estimates, the new system will be able to produce around 7000 units in the first year and the production will increase by 15% each year. The unit price is estimated to be $50 and the unit variable cost is estimated at $25. Additionally, labor cost is estimated at $15,000 in the first year and decreases by 5% each year and $12,000 of annual overhead costs (power and utility etc.). 2 3 4 5 6 7 8 14.29 24.49 17.49 12.498.93 8.92 8.93 4.46 Table 1: MACRS Depreciation Schedule with Half Year Convention for 7-Year MACRS property Develop the project's cash flows over its project life using the provided estimates by completing the following table (fill the missing parts). A tax rate of 40% is applied. (use the following numbering format: XX,XXX for thousand and XXX,XXX for hundreds of thousand) INCOME STATEMENT Rate of Changes Revenue a: Unit Price Demand (round-up] Total Revenue Expenses Unit Variable Coat Total Variable cost Labor (round-up) Overhead Depreciation fround up Taxable Income Income taxes (405) fround $44,910 545,510 564,875 590.280 Net Income $67,365 $68,265 $97,312 $135,420 CASH FLOW STATEMENT Net Income 567,385 $68,265 597.312 $135.420 Depreciation round-up) Investment Salvage Galne tax or credit (round up Net caeh S250.000 flow This part belongs to question 14. Based on the net present worth (NPW) of the project at the company's MARR of 10%. Is this project acceptable? Yes No Indifferent We cannot state. More information are needed