"Party Sea" would like to start a new line of business and spend $40,000,000 to buy luxury sailing catamarans for its many worldwide locations that would be available for rent. A few months ago it spent $50,000 on in-house consulting team to perform research of spending habits of the company's typical customers across its worldwide locations. A few weeks ago, it also paid $400,000 to buy software that forecasts future trends in customers expenditures based on past business data of the company.

If "Party Sea" does decide to make the multi-million dollar investment, it will need to immediately sell a large number of sail boats that has been its main rental income generator for the past decades. In particular, it currently owns 20 sail boats that were purchased brand-new 10 years ago for a total of $20,000,000. It also owns another 20 newer sail boats that were purchased brand-new 30 years ago for a total of $16,000,000. All of these can now be sold in bulk for a quarter of the original price. The sail boats have been losing their value at a constant annual rate over their 20-year economic life.

"Party Sea" 's business puts it into a 28% tax rate for all taxable income amounts.

If "Party Sea" decides to launch the multi-million dollar sailing catamaran project, how much would it need to consider for the Net Capital Spending in Year 0 of this project?

First, based on the above information, is there any cash flow or cash flows that "Party Sea" should ignore when making the sailing catamaran investment decision? Put the dollar amount of it here: $. Type 0 if none. Type the total dollar amount if it's non-zero, but do not type the "$" sign.

What is the total remaining book value of the sail boats, as of today? $. Type the total dollar amount but do not type the "$" sign.

If "Party Sea" decides to go ahead with the sailing catamaran project and the sail boats get sold today, how much will "Party Sea" be able to collect after taxes from selling the sail boats, i.e., the after-tax salvage value (ATSV)? $. Type the total dollar amount but do not type the "$" sign.

The Net Capital Spending in Year 0 should include the following. Refer to the table below. In the second column, type YES if that cash flow should be directly added to $40,000,000 (as either money spent or money received), and type NO if it should not be.

Money paid to internal consultants (money spent)
Money paid for the business forecast software (money spent)
Money spent in the past on buying the older sail boats (money spent)
Money spent in the past on buying the newer sail boats (money spent)
Selling price of the sail boats if they're sold today (money received)
ATSV of the sailboats if they're sold today (money received)

The numerical answer of your calculated Net Capital Spending in Year 0 is $. Round to whole dollar. Do not use the "$" sign.