Question: 5 . ( Worth 2 0 points ) A petroleum company is considering a new project that complements its existing business. The machine required for

5.(Worth 20 points) A petroleum company is considering a new project that complements its existing business. The machine required for the project costs $2 million. The marketing department predicts that sales related to the project will be $1.2 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated down to zero over its five-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 25% of sales. After four years the machine can be sold for $150,000. The petroleum company also needs to add net working capital of $100,000 in Year 0 when it acquires the machine. The additional net working capital will be recovered in full at the end of the projects life as opposed to the machine economic life. The corporation tax rate is 35%. The required rate of return for the petroleum company is 15%. Compute the NPV. Compute the internal rate of return. Compute the profitability index. Should the petroleum company proceed with the project? Your worksheet must follow this format:\table[[,,,,,,],[,,,,,,],[,,,,,,],[Free Cash Flow,,,,,,],[,,,,,,]]
 5.(Worth 20 points) A petroleum company is considering a new project

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