Task 4. Capital Budgeting for a New Machine

A few months have now passed and AirJet Best Parts, Inc. is considering the purchase on a new machine that will increase the production of a special component significantly. The anticipated cash flows for the project are as follows:

Year 1 $1,200,000

Year 2 $1,350,000

Year 3 $1,400,000

Year 4 $850,000

You have now been tasked with providing a recommendation for the project based on the results of a Net Present Value Analysis. Assuming that the required rate of return is 16.25% and the initial cost of the machine is $3,500,000:

1. What is the project