A 2-year project is under consideration. Here's what's known about its cash flows:

• $3,000,000 would need to be spent immediately to buy production equipment
• The production equipment will be depreciating according to the 3-year MACRS class
• At the end of the project, the production equipment is estimated to sell for a quarter of its original price
• $400,000 would need to be spent immediately on net working capital investment
• $1,000,000 would be generated each year in annual operating cash flows
• The company faces a 40% corporate income tax rate
• The rate of return for projects similar to this one is 10%.

Use the values in the MACRS table below for any relevant calculations. Click to enlarge to full page, if needed.

Based on the information above:

(a) The sale of the production equipment at the end of the 2nd year will generate an After-Tax Salvage Value in the amount of [ Select ] ["$ 1,500,000", "$ 1,166,760", "$ 988,920", "$ 750,000", "$ 716,760", "$ 538,920"] .

(b) When the project ends at the end of the 2nd year, the change in Net Working Capital for that final year will equal [ Select ] ["$ 800,000", "$ 600,000", "$ 400,000", "$ 300,000", "$ 200,000", "$ 0"] , and that will be [ Select ] ["a cash inflow", "a cash outflow", "neither a cash outflow nor a cash inflow"] for the company.