Question 1: Ithaca Inc. is considering the purchase of new machine that will reduce manufacturing costs by $15,000 annually. Ithaca will use the MACRS accelerated method to depreciate the machine, and it expects to sell the machine at the end of its 5-year operating life for $10,000. The firm expects to be able to reduce net working capital by $15,000 when the machine is installed, but the required working capital will return to the original level when the machine is sold after 5 years. Ithaca's marginal tax rate is 40 percent, and it uses a 12 percent cost of capital to evaluate projects of this nature. The machine will be purchased at a cost of $60,000. It will have depreciation expenses of $12,000, $19,200, $11,400, $7,200, and $6,600 in Years 1, 2, 3, 4, and 5, respectively. a. What is the amount of the initial cash flow at Year O? b. What are the operating cash flows for Years 1 through 5? c. What is the additional cash flow in Year 5? d. What is the project's NPV? What do you recommend to the company regarding this machine