Mary Ruby & Sons is a partnership where the partners all have a marginal tax rate of 27%. They are planning to invest in a new production line for the specific purpose of manufacturing GreenGroom. Due to their lack of finance expertise, they have hired you to assist in determining whether they should invest in this new machine for an expansion project. They have provided you with the following information: The project has a life of5 years; The equipment has a purchase price of $260,000 with an additional installation cost of $10,000 and transport cost of $5,000; 10 The equipment will be sold at the end of project life for $45,000; -TV The business uses diminishing value method in calculating depreciation; The Tax Authority aproves the use of prime cast depreciation method, spasket cast Projected annual profit figures for the year are as follows: effective Tif Year 1 Year 2 Year 3 Year 4 Year 5 Net Profit 45,000 40,000 43,000 38,000 40,000 3 4. al Sales for the first year will be $700,000 and sales are expected to grow at 5% per annum for each year of the project, COGs DNEF Cost of goods sold is 10% of sales each year; iDF sPirF 4. MPV Working capital will be 5% of sales revenues for each year. The working capital investment has to be made at the start of each period) Assume return of net working capital at the completion of the project; ) EXP. Commission of sales agents will be 2,5% of sales per annum; The current market salary is $25,000 per annum. They will need to hire3 employees. Calculate NPV for the project and provide appropriate advice to the firm. (17 marks). Calculate Terminal Value of the project.