Assume the following: Year Zero: Capital Investment = $4M and Increase in NWC = $.2M; Years 1 3: OCF = $3M; Year 3: Recovery of Earlier Increase in NWC and in addition Cash Flow from Salvage = $3M. What are the incremental cash flows for this project for years zero through 3?

(b) Assume the following for a piece of equipment: Purchase price $15,000; installation costs of $1,000; 5-Yr useful life with an estimated salvage value of $3,000; tax rate 35%; What would be the cash flow from salvage if the asset sold after 3 years for (a) $9,000 and (b) $5,500?