Central Food Inc., is considering replacing its current production line to improve efficiency. The new production line will cost $650,000 plus $50,000 for shipping and installation. The current production line has a book value of $74,000 and an estimated market value of $95,000. CF uses straight-line depreciation method and has a marginal tax rate of 25% for net income and capital gain. CFs current annual sales is $433,000 and by estimation, the new production line can increase CFs annual sales by about 28%. NWC will rise by $35,000. And due to higher maintenance cost, the operating costs will rise by $15,000 each year. In 11 years the production line currently under consideration can be sold for $110,000. CFs require rate of return is 11%.

For this replacement project: 1) Find initial investment and all the future incremental cash flows. 2what is the terminal year cash flow