Capital budgeting decision on new branch • Initial cost of building and equipment is $1.20 million • Expected to have a useful life of 20 years • Net working capital must be increased by $110,000 • At the end of the project the building and its equipment are expected to be sold for a $200,000 salvage value • The building and its equipment will be depreciated over their 20-year life using straight-line depreciation to a zero balance • The building is to be constructed on land leased for $22,000 per year • Annual revenues from the new branch will be $400,000 • Of this $400,000 in revenues, $50,000 will be drawn away from the bank’s main office • The new branch will incur about $130,000 per year in other expenses • Both expenses and revenues are expected to remain approximately constant over the branch’s 20-year life • Marginal tax rate is 40% • Cost of capital 9% Answer the following questions: What is the cash flow for the branch’s 20-year life Calculate the NPV, Profitability index, and Internal rate of return (IRR).