PRESENT YOUR ANSWER IN EXCEL AND SHOW YOUR FORMULAS

An industrial engineer proposed the purchase of RFID fixed-asset tracking system for the company's warehouse and weave rooms. The engineer felt the purchase would provide a better system of locating cartons in the warehouse by recording the location of the cartons and storing the data in the computer. The estimated investment, annual operating and maintenance costs, and expected annual savings are as follows: Cost of equipment installation: $85,500 Project life: 6 years Expected salvage value: $5,000 Investment in working capital (fully recoverable at the end of the project life):$15,000 Expected annual savings on labor and materials: $65,800 Expected annual expenses: $9,150 Depreciation method: Five-year MACRS The firm's marginal tax rate is 35%. Determine the net after-tax cash flows over the project life. Compute the IRR for this investment. At MARR=18%, is this project acceptable? Note: Build an Income Statement and a Cash Flow Statement in a single Microsoft Excel spreadsheet where you use Excel formulae to calculate depreciation expenses, taxable income, income taxes, net income, net cash flows, and PW(18%).