Massey Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $640,000 is estimated to result in $270,000 in annual pretax savings in direct production costs. The press falls in the MACRS five-year class, and it will have a salve value at the end of the project of $140,000. The press also requires an initial investment in spare parts inventory of $20,000, along with an additional $3,500 in inventory for each succeeding year of the project (Y1-3). All working capital is recaptured at the end (Y4).

The 5-year MACRS depreciation factors for years 1-6 are 0.2000, .32000, 0.1920, 0.1152, 0.1152, 0.0576

The tax rate is 35% and the discount rate is 14%.

What is the pure operating cash flow in years 1-4?

What is the additional after-tax cash flow on the sale of equipment in year 4?

What is the net present value (including the initial investment in equipment and working capital, all operating cash flows, additional working capital in years 1-3, working capital recapture in Y4, and salvage in Y4)?