Kellogg is investing in a new plant in the south. The plant will cost $250 million. The salvage value of the plant at the end of 5-year economic life is estimated to be $50 million. Please ignore any tax effect on this salvage value. The plan requires extra inventory of $300 million; it also requires additional accounts payable of $100 million. Sales from this new plant are projected to be 400 million per year. It will also reduce the sale of existing cereal Frosties by $100 million per year there by cannibalizing it. Fixed costs are estimated at $150 million per year, and the variable costs are $25 million per year. Depreciation after accounting for the salvage value will be $40 million per year. The tax rate is 35%.

8. What is the net investment cost of the plant?

9. Please calculate the incremental cash inflows in years 1 through n-1 of the project.

10. Please calculate the terminal year cash flows of the project.