1. Pirelli &C.S.P.Ais considering purchasing a new rubber extrusion line that produces rolling band, flanks, and the other products used in the process of tire manufacturing. This line will replace the existing one, which was purchased 5 years ago, at an installed cost of 400,000; it was being depreciated under straight-line amortization, and with a usable life of 5 more years. The new line costs 150,000 in installation cost; it has a 5 years usable life and would be depreciated under straight-line amortization, using a 5 years recovery period fot the calculation. Pirelli an currently sell the existing line for 150,000 without incurring any additional costs. To support the increased business resalting from purchase of the new line, accounts receivable would increase by 400,000, invenytories by 300,000 and account payable by 570,000. At the end of 5 years, the existing line would have a market value of zero; the new line would be sold to net 300,000 after removal and cleaned up costs and before taxes. The firm is subject to a 24% tax rate. The estimated earnings before interest, taxes, depreciation and amortization over the 5 years for both the new and the existing line are shown in the following table:

Year	New Line	Existing Line
1	450,000	280,000
2	450,000	250,000
3	450,000	200,000
4	450,000	180,000
5	450,000	150,000

1. Calculate the initial investment associated with the replacement of the existing line by the new one
2. Determine the operating cash flows associated with the proposed line replacement,
3. Determine the terminal cash flow expected at the end of year 5 from the proposed line replacement.
4. Depict on a timeline the incremental cash flow associated with the proposed line replacement decision.