Using Net present value: FlexStar management is evaluating whether to buy a new converting machine. The firm uses $10\%$ to discount such project cash flows. Use $2$ decimals for calculation. Use only information in the question.

FlexStar Corp is poised to invest $$1,500,000$ in cutting$-$edge machinery, while concurrently divesting fully depreciated legacy equipment for $$100,000$ as salvage. The new machinery comes with a $5-$year depreciation schedule, utilizing the straight$-$line method, and entails an annual expenditure of $$200,000$ for maintenance and repairs. FlexStar Corp intends to cover $70\%$ of this expenditure through cash and the remaining $30\%$ through a $5-$year loan at an annual interest rate of $5\%$ on the full loan amount, with the loan to be fully repaid by the end of the $5-$year period.

$$ Year $1$: Anticipates $$4$ million in revenue with a gross profit margin of $15\%,$ alongside associated operating expenses $($SG&A$)$ totaling $$250,000$ and additional depreciation expense of $$300,000.$

$$ Year $2$: Foresees $$5$ million in revenue with a gross profit margin of $20\%,$ a depreciation expense of $$300,000,$ and a $10\%$ uptick in SG&A compared to the preceding year.

$$ Year $3$: Expects an additional licensing fee for the machinery amounting to $$25,000,$ with an accompanying $25\%$ surge in revenue compared to the previous year, $20\%$ margin, owing to the company's newfound ability to access a fresh market segment. Other SG&A expenses are projected to remain consistent with Year $2.$

$$ Year $4$: Envisages sales to remain stagnant, with SG&A expenses mirroring those of Year $3.$ No license fee

$$ Year $5$: Anticipates $$5\mathrm{.}2$ million in revenue with a gross profit margin of $35\%,$ alongside operating expenses $($SG&A$)$ amounting to $$350,000.$ The company plans to divest the machinery and explore transitioning to newer technology, with an expected resale value of the old machinery around $$250,000.$

A$-$ USE NPV to provide your recommendation whether to invest, why? You must show your calculation in order to get marks. For the calculator, you must identify each element that leads to computing the results. $3$ marks

B$-$ Calculate the IRR of the project and explain how to use IRR to make buying decision. $1$