Wild west inc. must determine whether it should purchase a new machine costing 1500000. WW will also spend 150,000 to install and do the intial testing on the machine.

-The machine has a useful life of 15 years and will be depreciated uniformly (straight line) over its useful life.

-IF the new machine is purchased an old machine costing 500000 with a book value of 250000 will be sold for 200000.

- The new machine will require a working capital investement of 100000 that will be released at the end of the project.

-The machine is expected to generate annual cash savings of 150,000.

-At the end of the new machines useful life, it will be sold for 75000.

-Wild west cost of capital is 10% and its tax rate is 20%.

1.Calculate the net present value of all cash flows to determine whether or not the machine should be purchased.