question 5 and 6

5. ABC's Wire Products is considering a project that has the following cash flow and WACC data. What are the project's IRR, Payback period, NPV, and profitability index? WACC = 12%. Year 0 1 2 3 Cash flows- $800 $350 $350 $350 6. Alathe for trimming molded plastics was purchased 5 years ago at a cost of $9,000. The machine had an expected life of 10 years at the time it was purchased, and management originally estimated, and still believes that the salvage value will be zero at the end of its 10-year life. The machine is being depreciated on a straight-line basis. The R&D manager reports that a new special-purpose machine can be purchased for $12,000, and, over its 5-year life, it will reduce labor and raw materials usage sufficiently to cut annual operating costs from $9,000 to $4,000. It is estimated that the new machine can be sold for $2,000 at the end of 5 years. The old machine's actual current market value is $4,000. If the new machine is acquired, the old lathe will be sold to another company rather than exchanged for the new machine. The company's tax rate is 40%. The net working capital will decrease by $1,000 at the time of replacement and will be recovered in year 5. the new machine falls into the 3-year MACRS class, and, since the cash flows are relatively certain (MACRS depreciation rate: Year 1 - 33%, Year 2 = 45%. Year 3 = 15%, Year 4 = 7%) a. Compute the cash flow at initial cash flow b. Compute the cash flow at year 3 cCompute the non-operating cash flow at year 5