you do not need cost of old packaging sales

Spider Industries (SI) is evaluating new machinery to produce the packaging materials for their Webster apparel. Assume you are hired as assistant to the director of capital budgeting and asked to evaluate this expansion project. The new machinery would cost $350,000, plus an additional $20,000 to train the employee on the new equipment, $12,500 to install the machinery, and $10,500 to get the machinery delivered to the site. In addition, inventories would rise by $40,000, accounts receivable would rise by $5,000, and accounts payable would rise by $20,000. The additional level of working capital would be needed immediately and will be required until the end of the project. By a special ruling from the IRS, the new machinery will be depreciated under the MACRS system as a 3-year class property (33%, 45%, 15%, and 7%) The new machinery is expected to be used for five years due to the stability of products in the industry. The machinery is expected to have a salvage value of $125,000 at the end of its useful life. This machinery is expected to increase gross revenue by $200,000 per year. Total expenses for production will be $55,000 per year before depreciation and taxes. The new packaging material is expected to cause a decline in the sales of their existing packaging material by $10,000 per year. Spider Industries' marginal tax rate is 40% and their marginal cost of capital is 18%. After calculating all of the relevant incremental cash flows, calculate the net present value of the project. Is this project acceptable