Compton Brewery (CB) is considering buying a new goobering machine for $160,000. It will be fully depreciated using MACRS seven-year asset class for depreciation. Shipping and transportation to the factory will cost $35,000. Running the machine will require an immediate increase in working capital (inventory) of $3,500. The machine will increase annual sales revenue by $45,000, and will decrease annual costs by $13,000. The new machine will require a $1,500 additional investment in net working capital (inventory) in years 2, 3 and 4. The machine can be sold at the end of the 5^th year for 75% of its book value. The marginal tax rate is 34 %.

a. Calculate the net initial investment in year zero?

b. Calculate the net cash flow for the 4^th year of new kegs life.

c. Calculate the terminal cash flow when the company disposes of the kegs at the end of the 5^th year.