You are considering a project which will require purchasing amachine for $1M. Th

You are considering a project which will require purchasing amachine for $1M. The machine will have a four year usefullife and will be fully depreciated on a straight line basis.When the project is over you think there is a 50% chance that themachine can be sold for $ 200000. Undertaking the newbusiness which will be generated by the machine will require and upfront (Yr 0) investment of $ 150000 in Net Working Capital 40% ofwhich will be recovered after the project is over. Use of thenew machine will generate annual Sales of $ 500000 which Saleswill have a Total Operating Cost Margin of 60%. The companysaggregate tax rate is 35%.