A Corporation is considering a new business venture for 3 years:

The new business requires purchasing additional machinery that will cost $1,500,000 at t=0. For tax purposes, these capital expenditures will be depreciated on a straight-line basis over 4

years.

At the end of 3 years, the company will get out of the business and will sell the machinery at an estimated price of $350,000

.

The business requires a $170,000 investment in additional net working capital at t=0, which will be fully recovered at t=3

.

The company's marginal tax rate is 27.0%

The new business should generate $2,400,000 in sales each year (at t=1,2,3). The annual operating costs excluding depreciation are expected to be $1,600,000 per year (also at t=1,2,3).

The project's cost of capital is 13.0%

a. What is the Operating Cash Flow in Year 1?

b. What is the book value of the machinery in Year 3?

c. What is the total initial investment in Year 0? Give to the nearest $100

d. what is the Net Cash Flow in Year 3?

e. What is the new business venture's estimated net present value (NPV)?