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please answer both questions if possible Operating cash flows: Refer back to the data you received in problem #4. After you have calculated the Net

please answer both questions if possible

Operating cash flows: Refer back to the data you received in problem #4. After you have calculated the Net Income, calculate the Operating Cash Flows (OCFs) and enter the year 3 OCF:

Startup or initial costs (Year 0 costs): Continuing with the problem and data in #4 above, if the company paid $52,000 for the equipment, $3,000 for installation costs, and $8,000 for an increase in net working capital (mainly increase raw materials inventory to support the added machinery), calculate the initial years total cash outflow.

Data

Create a pro-forma income statement, and enter the Year 5 net income:

Your company is currently considering the purchase of a new production machine at a cost of $55,000 (including installation costs) and expects to increase revenues by the following amounts each year as a result of the new equipment:

Year 1 = $19,000

Year 2 = $28,000

Year 3 = $30,000

Year 4 = $35,000

Year 5 = $15,000

Year 6 = $10,000

Fixed costs for running the new equipment will be $5,000 per year, while variable costs will be 15% of sales. The assets depreciate according to the 5-year MACRS table. The company is not currently paying any interest expense, and they are taxed at 31% of EBIT.

Operating cash flows: Refer back to the data you received in problem #4. After you have calculated the Net Income, calculate the Operating Cash Flows (OCFs) and enter the year 3 OCF:

Startup or initial costs (Year 0 costs): Continuing with the problem and data in #4 above, if the company paid $52,000 for the equipment, $3,000 for installation costs, and $8,000 for an increase in net working capital (mainly increase raw materials inventory to support the added machinery), calculate the initial years total cash outflow.

After-tax CF from Salvage: Continuing with the example in #4, if at the end of the useful life of the equipment, the company can sell it for a salvage value of $3,000, what is the after-tax cash flow from salvage in the terminal year? (Remember that the tax rate is 31%).

Terminal year CFs: Continuing with the example in #4, what is the total year 6 cash flow resulting from this project (equipment purchase)?

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