assume a one year lag in the payment of taxes calculate the net present value 597772

The Sentosa Company operates in Ruratania where investments in plant and machinery are eligible for 25% annual writing-down allowances on the written-down value using the reducing balance method of depreciation. The corporate tax rate is 35%. The company is considering whether to purchase some machinery which will cost £1 million and which is expected to result in additional net cash inflows and profits of £500 000 per annum for four years. It is anticipated that the machinery will be sold at the end of year 4 for its written-down value for taxation purposes. Assume a one year lag in the payment of taxes. Calculate the net present value.