Question 6 (24 points) Lighthouse Ltd. is evaluating the proposed project on the acquisition of a new milling machine. The company has spent $28,000 last year in market research to explore the feasibility of the project. The machine will cost the company $840,000. The machine will be depreciated to zero using straight line depreciation over 4 years. It is expected 4 that it would be sold for $340,000 at the end of its life. The machine also requires an initial investment in inventory of $60,000, along with an additional $8,000 in inventory for each succeeding year of the project (that is, every year the level of inventory will be $8,000 higher than the previous year). The milling machine would have no effect on revenues. But, due to the improvement in production efficiency, it is expected to lower the fixed costs by $440,000 per year for the firm. Tax rate is 28% and the discount rate is 12%. What is the NPV of the project? Should Lighthouse Ltd. acquire the machine