Questions 1 to 3 refer to the following information. You are an analyst with Smith Securities. One of the companies that you follow is Mac Company. Mac Company is considering the purchase of a new 400-ton stamping press for an expansion project. The press costs $50,000. The press will depreciate straight line to 10,000 over a five-year life. The press will generate $40,000 in revenues each year and $20,000 in expenses. The press will be sold for $15,000 after 5 years. An inventory investment of $5,000 is required during the life of the investment. Mac is in the 35 percent tax bracket. The cost of capital is 10%.

1. What is the initial outlay?

2. What is the annual after-tax operating cash flow?

3. What is the terminal years after-tax non-operating cash flow at the end of year 5?