Using the formulas provided please answer the following required questions:

Century Lab plans to purchase a new centrifuge machine for its New Hampshire facility. The machine costs $137,500 and is expected to have a useful life of 8 years, with a terminal disposal value of $37,500. Savings in cash operating costs are expected to be $31,250 per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of $10,000 needs to be maintained at all times, but this investment is fully recoverable (will be cashed in) at the end of the useful life. Century Lab's required rate of return is 14%. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts. Century Lab uses straight-line depreciation for its machines. Required: 1. Calculate net present value 2. Calculate internal rate of return. Show workings such as variables used and/or use table format. 3. Calculate the Payback 4. Calculate accrual accounting rate of return based on net initial investment. 5. Calculate accrual accounting rate of return based on average investment. 6. You have the authority to make the purchase decision. Why might you be reluctant to base your decision on the DCF methods? Formulas: Residual Income: EBIT - (Required Rate of Return*Average Op Assets) EVA - WACC given: PAT-(WACC*Capital Employed) ROI = Margin * Turnover = EBIT/ Average Op Assets ARR = Average annual after tax accounting profit (Annual Cash flow- Depreciation)/Net Initial Investment Payback=NII/annual cash flows | PAT= PBT - (PBT*TR)= PBT * (1-TR) Where: PAT= Profit after tax, PBT= Profit before tax, TR=tax rate