Question 1: A clothing manufacturer is considering whether to add hoodies to its range of products. The hoodies would sell for $45 each and the company expects to sell 8,000 units per year. Selling hoodies, however, would cause sales of conventional jumpers to decrease by 1,000 units per year. The jumpers sell for $49 per unit. The variable costs of production are $25 per unit for hoodies and $20 per unit for jumpers. If the company adds hoodies to its range of products, fixed costs will increase by $60,000 per year and annual depreciation will increase by $15,000. What is the incremental operating cash flow from selling hoodies, if the corporate tax rate is 30%?

Question 2: A retailer is considering whether to open a new shop on a vacant block of land it owns. If the company goes ahead with the project, it will construct a new building at a cost of $2,157,000. It will also incur additional expenses of $386,000. The tax office has ruled that the building can be depreciated straight-line over 10 years, but the additional expenses are immediately tax-deductible. The land was purchased ten years ago at a cost of $1,139,000 and is worth $17,384,000 today. Setting up the new shop will require inventory of $531,000. What is the initial cash flow of the project, if the corporate tax rate is 30%? (make sure you indicate outflow as"-" and inflow are positive numbers. Only show the total value at the start of the project)