The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds (1957 replicas). The necessary foundry equipment will cost a total of $3,5900,000 and will be depreciated using a five-year MACRS life,

Year	3-Year	5-Year	7-Year	10-Year
1	33.33%	20.00%	14.29%	10.00%
2	44.45%	32.00%	24.49%	18.00%
3	14.81%	19.20%	17.49%	14.40%
4	7.41%	11.52%	12.49%	11.52%
5		11.52%	8.93%	9.22%
6		5.76%	8.93%	7.37%
7			8.93%	6.55%
8			4.45%	6.55%
9				6.55%
10				6.55%
11				3.28%

Projected sales in annual units for the next 5 years are 320 per year. If sales price is $26,000 per car, variable cost is $16,000 per car and fixed costs are 1,300,000 annually. What is the after tax cash flow if the tax rate is 40%? The equipment is sold for salvage for $525,000 at the end of year five. What is the after-tax cash flow of salvage? Net working capital increases by $550,000 at the beginning of the project (year 0) and is reduced back to its original level in the final year. If the sales price is $29,000 per car, variable costs are $19,000 per car, and fixed costs are $1,100,000 annually, what is the annual operating cash flow if the rate is 30%? The equipment is sold for salvage for $500,000 at the end of year five. Net working capital increases by $500,000 at the beginning of the project (year 0) and is reduced back to its original level in the final year. Find the internal rate of return for the project using the incremental cash flows. What is the incremental cash flow of the project? Using a discount rate of 12% for the project, determine whether the project should be accepted or rejected according to the NPV decision model.