ignore the selected answer for the first question, and yes I am aware the last part of the second question is cut off, but it shouldnt be detrimental to solving the problem, Thankyou!

would be advisable to replace an existing production machine with a new one. The have hired your firm as a consultant to determine whether the new machine should be purchased. The data you will need to make this determination is as followe - MMMI has decided to set a project timeline of 4 years. - The new machine will cost \$1.100,000. it will be depreciated (straight line) over a five-year period (its estimated useful life), assuming a book value of $100,000 at the end of its estimated useful life, le at the end of Year 5 . - The old machine, which has been fuily depreciated, could be sold today for $253,165. The company has recelved a firm offer for the machine from Wiliamston Widgets, and will sell it only it they purchase the new machlne. - Additional Sales generated by the superior products made by the new machine would be $665,000 in Year 1 . In Years 2.83 sales are projected to grow by 8.5% per year. However, in Year 4,5a les are expected to decline by 5% as the market starts to become saturated. - Total expenses have been estimated at 60.75% of Sales. - The firm is in the 219 marginal tax bracket and requires a minimum return on the replacement decision of 952 . - A representative from Stockbridge Sprockets has told MMMI that they will buy the machine from them at the end of the project (the end of Year 4 ) for $100,000. MMMI has decided to include this in the terminal value of the project. - The project will require $100,000 in Net Working Capital, 54% of which will be recovered at the end of the project. Piease calculate NPV and IRR for this project. $3,211,9,13% I understand that this question is beyond the difficulty level of any exam questions. However, I practice this difficult question to gain useful knowledge of the various components in the Ch10 capital budgeting model. There are mainly three parts; Year 0 investment then final year after-tax salvage value, net working capital Year 0 then final year; operating cash flows. Of course, I will select the other answer for points : Further, I realize that all other similar questions are so simple after I spend the time going over the model for this question. And yes, the model is so similar to the chapter model. Cool. Question 2 (1 point) For the above question, what is the operating cash flow for Year 1? $248,200 Although the length of the question and the complexity of the model are beyond the exam's scope, I practice this complex problem to sharpen my skills of the Ch10 capital budgeting model. This problem also highlights the importance of operating cash flow, which I review accordingly. Of course, I will select the other answer for points 1 Further. I realize that all other