Vigin Australia Airtines is considering the purchase of a new machine that will allow customers to check-in faster when it intends to resume international flights to Europe, the US and Asia from December. They are planning to install 10 of these machines at Sydney Airport Each machine willl cost $750,000 and is expected to have an economic life of 5 years, by which time it will be fully depreciated, with straight-line depreciation to zero. They will then be able to sell each machine for scrap metal and parts for $45,000. All 10 machines will replace 20 ground staff members whose combined annual wages are $2.000,000 per year but it will cost $15,000 per year to maintain each machine, The Australian corporate tax rate is 30% and an appropriate opportunity cost of capital is 8% p.a. on this project

a) Calculate the net cash flows per year during the life of this project (Years 0-5).

b) Should Virgin Australia Airlines undertake this project or not according to the net present value (NPV) and profitability index (Pl) methods? Explain.