Mayco, Inc. would like to set up a new plant (expand). Currently, Mayco has an option to buy an existing building at a cost of $28,900. Necessary equipment for the plant will cost $16,100 including installation costs. The equipment falls into a MACRS 5-year class. The building falls into a MACRS 39-year class. The project would also require an initial investment of $15,000 in net working capital. The initial working capital investment will be made at the time of the purchase of the building and equipment. The project's estimated economic life is four years. At the end of that time, the building is expected to have a market value of $25,432 and a book value of $26,426 whereas the equipment is expected to have a market value of $3,059 and a book value of $2,737.

Annual sales will be $107,700. The production department has estimated that variable manufacturing costs will total 65.0% of sales and that fixed overhead costs, excluding depreciation, will be $10,300 a year. Depreciation expense will be determined for the year in accordance with the MACRS rate. Mayco's marginal federal-plus-state tax rate is 35.0%., its cost of capital is 11.3% and, for capital budgeting purposes, the company's policy is to assume that operating cash flows occur at the end of each year. The plant will begin operations immediately after the investment is made, and the first operating cash flows will occur exactly one year later.

Under MACRS, the pre-tax depreciation for the building and equipment is: Year 1 = $3,931; Year 2 = $5,801; Year 3 = $3,647; Year 4 = $2,458. Compute the initial investment outlay, operating cash flow over the project's life, and the terminal-year cash flows for Mayco's expansion project. Then determine whether the project should be accepted using NPV analysis.

Please find out following:

a) Cash flow of 3rd year

b) Cash flow of 4th year

c) Terminal year Cash flow (TNOCF)

d) NPV