The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a labeling machine. The purchase price of machine is $55,000 with an additional shipping cost of $4000, and it falls into the MACRS 3-year class (depreciation rates are 33%, 45% 15%, 7% respectively). Purchase of machine would require one time increase in net operating working capital of $5,000. The project would increase the firm's before-tax revenues by $28,000 per year but would also increase operating costs by $8,000 per year. The machine is expected to be used for 3 years and then be sold for $25,000. The firm's marginal tax rate is 21percent, and the project's cost of capital is 9 percent.

a) What is the initial cash outflow required at t = 0? $..

b) What is the operating cash flow in Year 2? $.........

c) What is the non-operating (terminal) cash flows at the end of Year 3? $............

d) What are the NPV and IRR of the project? $............ and %

For each problem solving questions, show your work on your spreadsheet and record your final answer on the space provided under each