Malcolm Jones Industries has been in operation for many years and is looking to invest in a new piece of plant. He has decided on the Smithson 5000 after having taken a trip to Germany to inspect it before he made the decision to purchase it. The trip cost him $5000.

The new plant will require him to use a part of his factory that is currently leased to a friend for $6000 a month.

The new plant will cost $100,000 and he has been advised by his accountant that he should depreciate it over 10 years straight line as that is the expected life of the project. The ATO legislation states that it should be depreciated over 8 years straight line.

The company feels that they will need to keep an extra $30,000 in inventory from the start of the project.

The New project will require a loan of $80,000. The annual interest rate will be 10% and paid at the end of each year. The principle will be repaid at the end of the project. The loan is necessary for the project to be undertaken.

a) Calculate the cash flow impact of the trip taken to Germany. Answer to the nearest whole dollar.

b) Calculate the annual pre-tax impact of no longer being able to lease the factory to his friend.

c) Calculate the annual depreciation for the new plant.

d) Determine the cash flow impact of the inventory in period 10.

e) Determine the annual cash outflow recorded in the NPV analysis for the loan.