7. PDQ Corporation is considering an investment proposal that requires an initial investment of $100,000 in equipment. Fully depreciated existing equipment may be disposed of for $30,000 pre-tax. The proposed project will have a five-year life, and is expected to produce additional revenue of $45,000 per year. Expenses other than depreciation will be $12,000 per year. The new equipment will be depreciated to zero over the five-year useful life, but it is expected to actually be sold for $25,000. PDQ has a 40% tax rate.
   1. What is the net initial outlay for the proposed project?
   2. What is the annual (operating) cash flow for years 1-4?
   3. What is the total cash flow at the end of year five (operating cash flow for year 5 plus terminal cash flow)?