Auto Maker USA, Inc., a manufacturer of vehicle rims, is considering replacing an existing piece of equipment with a more sophisticated machine. The three year project information is given below. There is no market value for the existing machine after three more years of use, but the new machine can be sold for $80,000 at the end of the third year. They will require a $10,000 investment in net working capital at the start of the project. The firm pays 40% taxes on ordinary income and capital gains.

Project Information
Existing Machine		Proposed Machine
Cost	$155,000	Cost	$215,000
Purchased	3 years ago	Installation	20,000
Depreciation	MACRS 5-year	Depreciation	MACRS 3-year
Current Market Value	$95,000

Earnings before Depreciation and Taxes
Existing Machine		Proposed Machine
Year	Amount	Year	Amount
1	$110,000	1	$180,000
2	$95,000	2	$180,000
3	$85,000	3	$180,000

a. [34 points] Calculate the project relevant cash flows for years 0 through 3, including the initial investment, after-tax operating cash flows, and the terminal cash flow. *NOTE - IF YOU COPY AND PASTE FROM EXCEL, PLEASE COPY EACH OF THE THREE SECTIONS (INITIAL INVESMENT, CASH FLOWS, TERMINAL CASH FLOW) SEPARATELY. DO NOT COPY THE ENTIRE SPREADSHEET. I WILL NOT BE ABLE TO GRADE YOUR ANSWERS IF THE ENTIRE SPREADSHEET IS COPIED FOR ALL ANSWERS.