1. Mystic Beverage Company is considering purchasing a new bottling machine. The new machine costs $130,000, plus installation fees of $10,000 and will generate earning before interest and taxes of $60,000 per year over its 6-year life. The machine will be depreciated on a straight-line basis over its 6-year life to an estimated salvage value of 0. Mystics marginal tax rate is 40%. Mystic will require $50,000 in NWC if the machine is purchased.

(a) determine the initial outlay

(b) determine the annual cash flows in years 1-6

(c) determine the terminal cash flow