1. what is the after tax salvage value of the equipment?

2.estimate the operating cash flow for the project.

3.estimate the cash flows on account of changes in net working capital.

4.should the firm invest in this project? Explain Reasoning.

QUESTION 3 A project requires the purchase of an equipment that will cost 5600,000 and will be eligible for MACRS 5 year depreciation rule. The equipment will be sold after three years (when the project ends) for 30 percent of its original cost. Sales from this project are estimated at 5500,000 in the first year and will grow at the rate of 10% each year. The cash expenses will be 50% of the sales. Net working capital equal to 10 percent of next years' sales will be required to support the project and the investment in working capital is recovered at the end of the project. The required rate of return is 13 percent and the tax rate is 20 percent. Using above information solve the following questions MACRS 5 year depreciation schedule is as following: Year 1: 20%, Year 2: 32% Year 3:19.2%, Year 4: 11.52%. Year 5: 11.52%. Year 6 -5.76% 2. (2 points) What is the after tax salvage value of the equipment? b. Q2 points) Estimate the operating cash flows for the project cQpoints Estimate the cash flows on account of changes in networking capital d. (2 points) Should the firm invest in this project? Explain your reasons