Franco is considering the purchase of new equipment. To begin the project, the equipment costs $350,000, and an additional $120,000 is needed to install it. An inventory investment cost of $90,000 is also required at the start of the project. The equipment will be depreciated straight-line to zero over a five-year life. The equipment will generate additional annual revenues of $250,000, and it will have annual cash operating expenses of $80,000. The equipment will be sold for $70,000 after five years. Franco is in the 40 percent tax bracket and its cost of capital is 10 percent. Use the following information to answer the next four questions *Question 1 What is the initial outlay for this project? 3sok A. Initial outlay is $560,000 B Initial outlay is $475,000 40k C. Initial outlay is $520,000 D. Initial outlay is $515,000 *Question 2 What is the terminal year after-tax salvage value? A. Terminal year after-tax salvage value is $31.000 Terminal year after-tax salvage value is $42,000 B. Terminal year after-tax salvage value is $36,000 C. D. Terminal year after-tax salvage value is $48,000 *Question 3 What is the terminal year after-tax cash flow from the recovery of working capital? Terminal year after-tax cash flow from recovery of working capital is $90,000 A. Terminal year after-tax cash flow from recovery of working capital is $75,000 B. Terminal year after-tax cash flow from recovery of working capital is $70,000 C. D. Terminal year after-tax cash flow from recovery of working capital is $60,000 *Question 4 What are the annual after-tax free cash flows (operating cash flows) for years 1-5? A. $108,000 B. $139,600 C. $155,200 D.$104,000