1. The company is considering a new product. The new manufacturing equipment will cost \$19 million, and will require an initial $1 million investment in net operating working capital (i.e. increase in NOWC). a) What is CF0 (include the direction of the cash flow, i.e. positiveegative?)? b) What is the depreciation basis to be used for tax shield calculation? c) The company spent and expensed $150,000 on research related to the new product last year. Would this change your answer, why? d) Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. Would this affect your answer, why? 2. The financial staff of Cairn Communications has identified the following information for the first year of the roll-out of its new proposed service: The company faces a 25% tax rate. What is the project's operating cash flow for the first year (t=1) ? SHOW ALL YOUR WORK. OCF=(SalesCosts)(1T)+DT a. $7.0 million b. $9.6 million c. $5.2 million d. $7.8 million e. $4.8 million 3. Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $12 million, of which 75% has been depreciated (i.e. 25% of BV remaining). The used equipment can be sold today for $4 million, and the firm's tax rate is 25%. What is the equipment's net after-tax salvage value? Show your work. ATSV=SV(SVBV)T a. $750,000 b. $3,250,000 c. $4,000,000 d. $3,750,000 e. $6,000,000