ABC. is considering the purchase of a wind mill that costs $500,000 and produces before-tax operating cash flows (excluding CCA tax shields) of $130,000 per year for six years. The project requires a $15,000 increase in net working capital in Year 0; the working capital is recovered in Year 7, one year after the end of the operating cash flows. The CCA rate is 15% (declining balance method) and the half-year rule applies. The discount rate is 12%, the tax rate is 40% and the expected salvage value at the end of 6 years is zero.

1- What is the present value of the after-tax operating cash flows

(excluding CCA tax shield) for years 1 through 6?

2 - What is ABC's CCA tax shield in Year 2?

3 - What is the present value of ABC's CCA tax shields over the life of the project?

4 - What is the overall impact of the changes in working capital on Innovative Energy Co. project's NPV?

PLEASE PROVIDE FORMULAS IN ANSWERS