11

The Juniper Network Company is considering a new 5 -year expansion project that requires an initial fixed investment of $2.5 million. The fixed asset will be deprectated straight line to zero over its five year tax life, after which time it will be worthless. The applicable tax rate is 22\%. The company's analyst expects that the fixed asset can be sold for $200,000 at the end of its life. Estimated annual sales for the brofect are $2.2 milion with annual costs of $1.15mm. The project will also require an initial investment in NWC of $140.000. The net salvage cash flow assodated with the project is 5 this will change the net cash flow in year 5 to 3