Your Company Limited (Your Company) is a well-known chocolate manufacturer. There is the opportunity for Your Company to enter into a new overseas market that is eager for Australian chocolates. To assist in understanding this opportunity you have commissioned a $150,000 report into the viability of a new machine that will allow for higher levels of production.

The new project will require Your Company to locate the new machine on a floor of their building that is currently being rented out to a separate business. The rent that Your Company currently receives is $70,000 a year. Once the project is complete, space will become available again and the business will seek a new tenant to rent that space.

There is also an existing machine from a previous project that has a written down value of $0. You were recently offered $500 to sell this asset but you believe that it can also be used in the new project. At the end of this project, the machine will be discarded.

The new machine has been valued at $100,000. The machine is expected to meet Your Companys needs for 10 years of operational life. and the insurance is $1000 per year

With increased output, Your Company needs an additional stock of $250. Initial advertising costs are expected to be $15,000 and the existing advertising budget $18,000 per year. One less staff member is needed due to automation and salaries will be $10,000 per year.

Revenue related to this project is expected to be $100,000. Material costs are expected to be $800 in the future years

It is believed that the new higher quality product will reduce existing sales by $100 per year and related costs will fall by $100 per year.

At the end of the project, the new machine is to be sold for $5,000.

Cost of capital is 12% and the tax rate of 30% to apply. You are required to complete a capital budget to determine if this project is worth completing.

Note: Should the sales increase each year? or should stay the same every year. Due to the facts, the number of sales can lead to a change in the number of material costs and wages.

Please show calculation please