An incorporation is considering the purchase of a new packaging machine to have a more creative and innovative packaging

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An incorporation is considering the purchase of a newpackaging machine to have a more creative and innovative packagingdesign. The manager thinks that an innovative packaging design willhave a positive impact on sales and the purchasing experience forthe customer.
-The initial outlay of the machine is 12,500,000
-Each year the operation inflows are equal to AED 5,000,000
-During the third year the equipment will require maintenancewith the cost of 1,000,000
-The required rate of return on this project is 10 percent.
-One of the objectives is to cover the initial outlay in 3years.
Based on the above information,
1.Calculate the annual net cash flow. 1 Mark
Year
Cash Flows
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1
2
3
4
5