Murray’s Machine Shop is considering a five year project to improve its production efficiency. Buying a new machine press for $850,000 is expected to result in annual pre-tax cost saving of $310,000. No additional sales are expected from this project. The machine press will be depreciated straight-line to zero over its five year life. After that it is expected to be obsolete and therefore worthless. The company will be able to reduce net working capital (NWC) by $75,000 at the beginning of the project. NWC will revert back to its original level at the end of project. The company’s hurdle rate is 15%. The tax rate is 21%. a. List all the assumption of the project. b. Calculate each year’s depreciation and ending book values. c. Prepare pro forma income statements for the five years of the project’s life. d. Calculate the changes in net working capital. e. Calculate the project’s operating cash flows. f. Calculate the project’s net net cash flows. g. Calculate the project’s net present value (NPV) h. Calculate the project’s internal rate of return (IRR) i. Should the company purchase the new machine press? Why or why not? (Must be done on a spreadsheet using Excel formulas only)