• A proposed new project will last for 4 years and requires the purchase of a new machine. The current price of the machine is $300,000, and the machine can be sold for $8,000 by the end of year 4. The machine falls in the MACRS 3-year depreciation class. The associated percentages for different depreciation classes are provided in the following table.

year	3-year	5-year	7-year
1	33.33%	20.00%	14.29%
2	44.45%	32.00%	24.49%
3	14.81%	19.20%	17.49%
4	7.41%	11.52%	12.49%
5		11.52%	8.93%
6		5.76%	8.92%
7			8.93%
8			4.46%

• Relative to the current inventory level, the inventory requirement for this project is:

yr1	yr2	yr3	yr4
$10,000	$10,000	$12,000	$12,000

• The project has projected annual sales of $450,000.

• Variable costs are 40% of sales, and fixed costs are $100,000 annually.

• The marginal tax rate is 40%.

• The discount rate is 9%

.

What are the cash flows related to net capital spending for this project?

answer selection

$300,000 at time 0 only.

$300,000 at time 0 and $8,000 at the end of year 4.

-$300,000 at time 0 and $8,000 at the end of year 4.

-$300,000 at time 0 and $4,800 at the end of year 4.

-$300,000 at time 0 and -$4,800 at the end of year 4.

Show calculations and be specific please :)