Q#12 1 18 contemplating a new automatic surveillance system to replace its current security system. It will cost $400,000 to get the new system. The cost will be depreciated using straight- me depreciation approach over the system's four-year expected life. The system is expected to nave zero salvage value after 4 years. It is estimated that the new system will generate $250,000 revenue and the cash expenses will increase by $125,000.. The marginal federal plus state tax rate is 34 percent and the discount rate of the project is 17 percent. 12 (a) What is the estimated operating cash flow of the project in year 1 through 4? (5pts.) (Use Operating Cash flow Net Income + Depreciation) (A) 125,000 Show your work below (B) 250,000 (C) 16,500 (D) 100,000 (E) 116,500 12(b) What is the NPV of the project? (5pts) (A) 16,500 Show your work below (B) (80,410) (C) (80, 510) (D) 116,500 (E) 100,000 12(c) What is the IRR of the project? (5 pts) Show your work below (A) 10.5% (B) 8.5% (C) 7.5% (D) 6.4% (E) 11.5%

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