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Foster Company wants to buy a special automated machine to replace an existing manual system....

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Accounting

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Foster Company wants to buy a special automated machine to replace an existing manual system. The outlay required is $3,500,000. The new machine will last 5 years with no expected salvage value. The expected annual cash flows are as follows: 2. Set up a table similar to the one in the Excel example file to show the calculations for the NPV (how you format it is up to you). You MUST show the years, annual net cash flow, discount factor, present value, and final NPV. MUST use a formula in the cell for any ralsulatinns If nnints) 3. Now assume that inflation over the 5 year useful life of the machine is expected to be 5% each year. Explain how the company would account for inflation in their estimates? ( 2 points) 4. Calculate the new net cash flow values for each year (to include inflation consideration). Hint: Inflation does not affect the outlay in year 0. (3 points. MUST use a formula in the cell for your calculations) 6. Accounting for inflation is a necessity in any planning/budgeting decision. Compare the NPV you calculated in \#2 vs the NPV you calculated in \#5. Did accounting for inflation change the decision the company should make? How so? ( 2 points)

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