1. Due to the different manner in which the Presetter 3000 machine sprays, it will be necessary to purchase an additional $50,000 of inventory in year 0. Michael will be able to recover this cost when he disposes of the Presetter machine in five years time.

Michael has to purchase additional inventory (packaging material) which is included in the year 0 cash flow. What is the tax impact in dollar terms in year 0?