PLEASE help me with this Finance problem, I'm lost! I not only need to get the answers for the problem, but I also need to learn/know how to solve for all of these things. The subject is: Cash Flow Estimation and Risk Management / Finance. I have attached the PROBLEM/question which is in RED, along with the Info that needs to be filled in for the problem, and the fill-in info is in BLUE, and the homework Questions are in HOT PINK. Thank you so much in advance for your time and help. You may email, call, or text me. Thank you so much!

Kimberly D..s@gmail.com

CELL: (318) 787-8211

PROBLEM: Kaffie Frederick is considering an expansion of it's operations by introducing a new product line. In order to expand, they will have to buy new machinery for $1,000,000. The machinery will be depreciated using three-year MACRS (33%, 45%, 15%, 7%). In four years they will be able to sell the machinery for $250,000. If they go through with the planned expansion, Sales of the new product will be $750,000 per year and sales of the old product will rise by $50,000 per year. Variable Costs on the new product are 75% of new product sales while variable costs on the old product are 65% of old product sales. The new project will require additional fixed costs of $20,000 per year. The tax rate is 40%. What are the incremental cash flows associated with this proposed project? Fill-in: Balance Sheet Effects Today |---------------Depreciation Expenses-------------------| Year 1 Year 2 Year 3 Year 4 Year 5 1. Buy New Assets 2. Trade In Old Assets 3. Keep Old Assets 4. Change in NWC Income Statement Effects Year 1 Year 2 Year 3 Year 4 Net Sales - Net COGS - Net Depreciation - Net Fixed Costs = Net OEBT - Net Taxes = Net OEAT + Net Depreciation = Net Operating CF Year 5 End Total Cash Flows CF0 = C01 = C02 = C03 = C04 = C05 = C06 = Homework Questions: 5. What is the Initial Cost of this project? a) $500,000 b) $1,000,000 c) $1,500,000 d) $2,000,000 6. What is net depreciation expense on the income statement in Year 1? a) $175,000 b) $250,000 c) $330,000 d) $475,000 7. What is the After Tax Salvage Value of selling the equipment at the end? a) $110,000 b) $150,000 c) $175,000 d) $215,000 8. What is the Operating Cash Flow in Year 2 a) $238,000 b) $291,000 c) $363,000 d) $422,000 Kimberly Deshotels kimberlydeshotels@gmail.com CELL: (318) 787-8211