First part:

believes that it can increase its market share to 20% by investing $10 million in a new distribution system (which can be depreciated over the system's life of 10 years to a salvage value of zero) and spending $1 mil- lion a year in additional advertising. The company proposes to continue to maintain working capital at 10% of annual revenues. a. What is the initial investment for this project? b. What is the annual after-tax cash flow from this project?12. You have been hired as a capital budgeting analyst by a sporting goods firm that manufactures athletic shoes and has captured 10% of the overall shoe mar- ket. (The total market is worth $100 million a year.) The fixed costs associated with manufacturing these shoes is $2 million a year, and variable costs are 40% of revenues. The company's tax rate is 40%. The firm