A. Below is the inremental cash flow table.

	Year 0 (NOW)	Year 1	Year 2	Year 3
operating cash flow
capital investment	$ (1,200,000.00)
change in the net working capital	$ (54,000.00)			$ 54,000.00
salvage of the capital investment				?
Incremental cash flow	?		?	?

What's the incremental cash flow at year 0 (right in the beginning of the project)?

A.		-$1,200,000
B.		-$930,000
C.		$324,000
D.		-$1,254,000

B. What's the incremental cash flow of the projct at year 2?

A.		$378,000
B		$270,000
C.		$324,000
D.		$0

C. What's the incremental cash flow of the projct at year 2?

A		$378,000
B.		$270,000
C.		$324,000
D.		$0

D. What's the cash flow received by salvaging the equipment at year 3 (end of the project)? Recall that the company will be able to sell the equipment for $500,000 at the end of the project (year 3).

A,		$494,000
B		$480,000
C.		$240,000
D		$500,000

E. What's the incremental cash flow of the project at year 3?

A.		$548,000
B.		$324,000
C.		$818,000
D.		$872,000

E. Assuem that this project needs a new office space. You would include the rent of the new office space in .

A.		Fixed cost
B.		You don't include it, it is an irrelevant cost.
C.		Production cost
D.		Capital investment

F. Assume that your company has paid $10000 to an accounting expert to estimate the production costs and fixed costs based on the historical costs in the companys financial statements. You would include that cost in .

A		Labor/production cost
B		Nowhere because it is a sunk cost
C		Investment in net working capital
D.		Fixed cost