The Cookie Company is considering adding a new automated baking machine to its production floor. The machine's base price is $$1,720,000,$ and it would cost another $$80,000$ to install it$.$ The machine falls into the MACRS $3-$year class, and it would be sold after $3$ years for $$800,000.$ The MACRS rates for the first three years are $0\mathrm{.}3333,0\mathrm{.}4445,$ and $0\mathrm{.}1481.$ The machine would require an increase in net working capital $($inventory$)$ of $$75,500.$ The machine would not change revenues, but it is expected to save the firm $$420,000$ per year in before$-$tax operating costs, mainly labor. Their marginal tax rate is $27\%.$

What is the Year$-0$ cash flow?

What are the cash flows in Years $1,2,$ and $3?$

What is the additional Year$-3$ cash flow $($i$.$e$.,$ the after$-$tax salvage and the return of working capital$)?$

If the project's cost of capital is $10\%,$ what is the NPV$?$

Should you pursue this project?

$(20$ points$)$