you have just been hired by Edifice Wrecks, Inc. (the demolition company) to evacuate a proposal to purchase a new solar powered a new solar-powered, web-enabled building smasher to replace an existing hand-powered smasher. you have discovered that:

• The old hand-powered smasher was purchased 5 years ago for $ 90,000 is being depreciated for tax purposes using the straight line method over an 8 year life to a $ 10,000 salvage value. The old smasher's salvage value remains $ 10,000 however it could be sold today for $ 25,000. $ 15,000 is invested in working capital in support of this smaher.
• The new smasher would cost $ 125,000 and be depreciated for tax purposes using the straight-line method over a 3 year life to a salvage value of $ 5000. with the new smasher, revenues are expected to increase from $ 4,000,000 tp $4,055,000 in each of the next 3 years. At the end of the 3 years, the new smasher could be sold for its accounting salvage value of $ 5000. The new smasher would require $ 25,000 in supporting working capital
• The Firm is in the 35% marginal income tax bracket and has a 13% cost of capital.

Required

a. Prepare the cash flow spreadsheet for the analysis of this project.

b. calculate the project's:

1. net present value (NPV)
2. Internal rate of return ( IRR)

c. Should the new smasher be purchased? why or why not?