Swindle Corporation is a manufacturer of a variety of swimwear, such as suits, jammers and goggles. In order to improve the quality of existing products, the production manager of the company proposes to replace a machine used in the molding process. As a financial manager of the company, you are responsible for assessing the feasibility of this project. After conducting a preliminary study, it is estimated that the project will generate additional sales revenue of $410,000 in each of the next three years. It is known that the company faces a marginal tax rate of 20% and wants a 10% required rate of return. In addition, the company employs the simplified straight-line method to compute its depreciation. To finance the project, the company has to borrow $1,000,000 at 7% interest from its bank. Other findings of the study are presented as follows:

	Old machine	New machine
Initial purchase price	$2,350,000	$1,800,000
Tax life	8 years	3 years
Age	5 years	0 years
Shipping fee	$180,000	$220,000
Installation cost	$110,000	$80,000
Expected salvage value	$ 0	$ 0
Current market value	$990,000	N.A
Annual cost of defects	$140,000	$110,000
Annual cost of maintenance	$280,000	$330,000
Inventory stock	$430,000	$360,000
Accounts receivable	$250,000	$370,000

Required: a. Determine the initial outlay associated with this project. (8 marks) b. Calculate the annual after-tax cash flows associated with this project, for years 1 to 3. (12 marks) c. Should the company buy the new machine? Please explain your answer. (10 marks) d. Suppose the purchasing manager of the company is negotiating with the supplier of the new machine for a discount on the machines purchase price. What should the discount be in order to attract the company to buy the new machine? (20 marks)