Dr. Hunter Thompson is considering opening an MRI clinic in Aspen. The business will operate for three years. The MRI machine, a GE, costs $2.6M and will be delivered immediately. The machine is in Class 43 with a depreciation rate of 30%. The machine can be sold for $500,000 at the end of the three years. Dr. Thompson estimates that he can perform 2,500 scans annually at $700 per scan for $1.75M of annual revenues. Dr. Thompson will lease office space in a local strip-mall and estimates that annual operating expenses will be $550,000 (including rent, salaries, and wages). Dr. Thompson plans to offer credit to his customers. He expects to have about 45 days of sales in accounts receivable, or about $300,000. He has arranged venture funding from Oscar Acosta who expects a return of 10% on his invested capital. The tax rate is 35%. Answer the following questions to determine if the project is worth undertaking. Part 1 What are the initial cash flows? Round to the nearest dollar. $ Question 2 Part 2 What are the operating cash flows in Year 1 (ignoring depreciation)? Round to the nearest dollar. $ Question 3 What is the sum of the net working capital and salvage cash flows in the terminal year? (In other words, terminal cash flows not including operating cash flows, depreciation tax shields, and the PV of tax shields.) Round to the nearest dollar. $ Question 4 Part 4 What is the adjusting cash flow in Year 2 for the depreciation tax shield? Round to the nearest dollar. $ Question 5 Part 5 What is the present value of tax shields in the terminal year? Round to the nearest dollar. $ Question 6 Part 6 What is the NPV of the project? Round to the nearest dollar. $