1. A firm is planning to purchase a new machine to replace old. The cost of machine is $400,000, shipping is $50,000 and installation is $30,000. Also the company has to train employees in order to operate the machine which cost the firm another $100,000. The company spent $50,000 for the marketing and another $20,000 for consulting previously. The company can sell the old machine for $100,000 while it has the book value of $0. The new project requires the company to invest in working capital that is $70,000. If the companys marginal tax rate is 40%, what is the initial outlay of replacing the machine? Round to the nearest penny. Do not include a dollar sign in your answer. Type the absolute value of the answer. (i.e. If your answer is -$20,000 since it is cost to replace, type 20000 as your answer.)

2. XYZ Company is considering whether a project requiring the purchase of new equipment is worth investing. The cost of a new machine is $340,000 including shipping and installation. The project will increase annual revenues by $400,000 and annual costs by $100,000. The machine will be depreciated via straight-line depreciation for three years to a salvage value of $40,000. If the firm does this project, $30,000 in net working capital will be required. What is the annual cash flow of this project in the second year if the tax rate is 40%? Round to the nearest penny. Do not include a dollar sign in your answer.