Company XYZ wants to expand its operations with an aggressive plan. This plan entails building a new factory. The initial cost is $480 million (at t=0), it will last 8 years and is depreciated straight-line to a book value of 0. Annual sales and costs will be $300 million and $200 million respectively (in all 8 years). Inventories will rise immediately by $17 million. All working capital components return to original values at the end of the project's life. Assume tax rate is 25%.

a) If salvage value of the factory at t = 8 is $140,898.50. What is the after tax salvation value?

b) If Accounts Payable rises immediately by $17.9 million. What is the change in working capital in year 0 ?