North Haverbrook is following the lead of Sydney and dismantling its failed monorail. The town has given the monorail to Langley Construction (LC). In exchange for receiving the former monorail land for free, Langley Construction must bear all the costs of dismantling the monorail. LC had originally planned to simply turn the land into retail space. However, it is now evaluating a project to instead turn the monorail stations into a marginally more efficient means of transportation via an as-needed pogo stick rental service. The pogo stick project has the following characteristics: Dismantling the monorail stations is expected to cost $8.7 million this year Building the retail space would cost $2.4 million this year The pogo stick rental locations would cost the same as the retail space. However, the firm will need to spend $1.9 million acquiring new pogo sticks if it pursues this project Retail space would be depreciated at prime cost over a useful life of 20 years Pogo sticks would be depreciated at prime cost over a useful life of 12 years At the end of year 4, the firm expects to sell its entire stock of pogo sticks for $398,000 The Pogo Stick project by itself is expected to generate $12,600,000 in pre-tax operating profits annually. When these profits are combined with the rest of their business, the firm will generate $45, 200,000 in total pre-tax operating profits. The marginal tax brackets for Langley Construction are given in the following table: Taxable income $ Tax Rate 0 to 10 million 10 to 25 million 25.0% $2.5 million + 30.0% of the amount over $10 million $7 million + 37.9% of the amount over $25 million $16.5 million + 40.0% of the amount over $50 million 25 to 50 million More than 50 million million. (a) The incremental capital expenditure of the pogo stick project at t=0 is $ (Round your answer to one decimal place) (b) The after-tax salvage value of the pogo sticks in year 4, expressed as a time 4 value (i.e. do not give the present value) is $ (Round your answer to the nearest dollar)