Hurley$$s Winery is planning to acquire a new grape masher. The masher will cost

$$100,000$ including shipping and installation and will be depreciated as a $7-$year

MACRS asset. At the time the masher is purchased, Hurley will have to invest

$$5,000$ in net working capital. Additional investments in net working capital are

required at the end of year $1($$$3,000)$ and year $2($$$2,000).$ Net revenues attributable

to the masher are expected to total $$25,000$ during year $1$ and to grow by $5$ percent

per annum through the end of year $6.$ After that time, revenues are expected to

decline by $10$ percent per annum. Annual year $1$ cash operating expenses are

expected to total $$10,000$ and to grow at an annual rate of $10$ percent per annum.

Hurley expects to sell the masher at one second after midnight on the first day of

year $8$ for $$10,000.$ The marginal tax rate for Hurley is $40$ percent for ordinary

income and $28$ percent for capital gains. $($Hint: See Appendix $9$A for information

on MACRS depreciation.$)$ Compute the expected net cash flows for year $7.$ Include

in your year $7$ calculations the proceeds from the salvage value of the masher and

recovery of net working capital at the beginning of year $8.$ For the purposes of present value calculations, you may assume that the end of year $7$ is the same as the

beginning of year $8.$