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$x$ Inc., is planning to make a major capital investment decision for its future expansion. The cost of investment is $$200,000$ and installation etc. will add another $$50,000.$ X is estimating that they will be able to sell at least $100,000$ additional units of their new product at the price of $$6$ per unit for each of the next four years, which is the life of the project. This estimate is based on a market survey conducted by $x$ at the cost of $$30,00d$ before this decision to invest in this project. The variable cost is $$2\mathrm{.}50$ per unit and the fixed cost will be $$100,000$ each year. The current assets will increase by $$100,000$ and the current liabilities will increase only by $$30,000.$ This will be completely recovered $/$ repaid at the end of the project. The new product will likely increase the sale of an existing product also by about $$75,000$ each year. $x$ is using its existing vacant space that would have received a rent of $$25,000$ per year. This machine will be depreciated fully in four years using a straight$-$line method. However, $x$ will be able to sell the machine for $$40,000$ at the end of project life. Assume a tax rate of $21\%$ and risk$-$based cost of capital of $11\%.$ Based on the above information, answer the following questions:

What is the initial cash outflow? $(8)$

What is the operating cash flow each year? $(20)$

What is the after$-$tax salvage value of the fixed asset? $(5)$

What is the terminal year cash flow? $(10)$

What is the NPV of the project and what is your decision to invest and why? $(5)$

What is the IRR of the project, what is your decision and why? $(3)$

What is the pay$-$back period? Write two drawbacks of this method? $(4)$

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