Global Finance. Net Present Value and Capital BudgetingBakery Company makes bread in a small bakery in New York. In a recent move to expand its current operations, the owner commissioned a local consulting firm to study the feasibility of building an additional bakery in New Jersey. The consultants charged a fee of $100,000 and concluded that the project was feasible.The new bakery will cost $2,500,000 to construct. Ovens, conveyors and other equipment will cost an additional $500,000. The installation and preparation to use the new equipment will cost $50,000. The ovens and other equipment will last 5 years and are expected to sell for $150,000 at the end of year 5. The building is expected to sell for $2,000,000 in 5 years. The equipment has a 3-year class life and the building has a20-year class life according to Internal Revenue Service guidelines.The new bakery is expected to generate new sales of $2,000,000 per year for 5 years.However, annual sales of $250,000 will be lost at the New York bakery. The new plant is expected to cost an additional $500,000 per year to operate.The company anticipates additional working capital requirements to fund the new operation. The net change in working capital is expected to be $350,000. The firm?s policy is to fund working capital requirements at the time of the initial investment outlay.The firm?s opportunity cost (i.e., hurdle rate or discount rate) is 15% for this type of project. The marginal corporate tax rate for the firm is 30%. Should the firm accept the project and build this new bakery in New Jersey?Should the company invest in this new bakery? You need to calculation the deprecation of plant and equipment. You also need to consider the working capital. Finally, compute the NPV and IRR to check if the investment is worthwhile.