Singh Company is planning to acquire a $300,000 machine to improve manufacturing efficiencies, thereby reducing current annual cash operating costs (before taxes) by an estimated $80,000 for each of the next five years.The estimated additional overhead costs include insurance for $2,000 and electricity for $3,000, per year.There will be also be required maintenance inyears 1, 3 and 5 that will cost $1,500 per visit for the technician and anticipated average parts usually cost around $5,000.Singh will also receive $3,000 per year as a tax credit for a qualifying government program for its industry due to its purchase of the new machinery.Tax credits are reduced against the income tax calculated for the year.The companyuses a discount rate of of8%. The machine will be depreciated using straight-line method over a five-year period with no salvage value. Even though depreciation is calculated with no salvage value, the machine is estimated to sell for $10,000 pre-tax.Singhis subject to a combined 40% income tax rate.

Note:at 8%, the PV annuity factor for five years is 3.993; at 8%, PV $1 factors are as follows: for year 1 = 0.926; for year 2 = 0.857; for year 3 = 0.794; for year 4 = 0.735; and, for year 5 = 0.681.

Required:

Use MS Excel and Word, as appropriate, to submit your responses.

1. Develop an after-tax cash flow schedule for the machine purchase decision that clearly identifies a project initiation, project operation and project disposal cashflow analysis structure. (14 points)

2. Using thenet present value (NPV) decision model forthe proposed investment for Singh, calculate the NPV using an Excel formula using the results from question1,rounded to the nearest whole number?(6 points)