Read the situation below, complete information for year 21.

As you know from Project 4, McCormick & Company is considering building a new factory in Largo, Maryland. McCormick & Company decided to offer $4,424,000 to obtain the land for this project. The new factory will require an initial investment of $350 million to build the new plant and purchase equipment.

You have been asked to continue your work from project 4 with a full analysis of the proposed factory, including the start-up costs, the projected net cash flows from operations, the tax impact of depreciation, and the cash flow impacts of changes in working capital.

The investment will be depreciated as a modified accelerated cost recovery system (MACRS) seven-year class asset. The correct depreciation table is included below.

The company will need to finance some of the cash to fund $17 million in accounts receivable and $14 million in Inventory starting at year zero. The company expects vendors to give free credit on purchases of $15 million (accounts payable). The CFO wants you to consider the net cash outflows for working capital as well as the cash outflows for the plant, equipment, and land in year zero.

Note: The $17 million for accounts receivable and the $14 million for Inventory are cash outflows. The $15 million for accounts payable is a cash inflow.

The CFO has indicated that this net working capital will be recovered as a cash inflow in year 21. She also estimates that the company will be able to sell the factory, equipment, and land in year 21 for $40 million.

The company estimates that the cash flows from operations will be as shown in Table 2. Note: Only the cash flows related to operations (years 1-20) will generate accounting profits and thus taxable income (or losses).

Year Cash After tax Cash from outflow, Taxable Tax in Cash Flow Revenue in expenses Depreciation Income in $ SMillions $Millions in in Millions Millions 27.5% rate SMillions 0 1 $ 1,800.00 $ 1,728.00 $ 50.02 $ 21.99 $ 6.05$ 65.95 2 $ 1,900.00 $ 1,824.00 $ 85.725 (9.72) S (2.67) $ 78.67 3 $ 2,000.00 $ 1,920.00 $ 61.22 $ 18.79$ 5.17$ 74.83 4 $ 2,100.00 $ 2,016.00 $ 43.72 $ 40.29 $ 11.08$ 72.92 5 $ 2,200.00 $ 2,112.00 $ 31.26 $ 56.75$ 15.60 $ 72.40 6 $ 2,300.00 $ 2,208.00 $ 31.22 $ 60.78$ 16.71 $ 75.29 7 $ 2,400.00 $ 2,304.00 $ 31.26 $ 64.75$ 17.80 $ 78.20 8 $ 2,500.00 $ 2,400.00 $ 15.61 $ 84.39 $ 23.215 76.79 9 $ 2,600.00 $ 2,496.00 $ $ 104.00 $ 28.60 $ 75.40 10 $ 2,700.00 $ 2,592.00 $ S 108.00 $ 29.70$ 78.30 11 $ 2,600.00 $ 2,496.00 $ S 104.00 $ 28.60 $ 75.40 12 $ 2,500.00 $ 2,400.00 $ S 100.00 $ 27.50 $ 72.50 13 $ 2,400.00 $ 2,304.00 $ S 96.00 $ 26.40$ 69.60 14 $ 2,200.00 $ 2,112.00 $ $ 88.00 $ 24.20 $ 63.80 15 $ 2,000.00 $ 1,920.00 $ $ 80.00 $ 22.00 $ 58.00 16 $ 1,800.00 $ 1,728.00 $ 72.00 $ 19.80$ 52.20 17 $ 1,500.00 $ 1,440.00 $ 60.00 $ 16.50 $ 43.50 18 $ 1,200.00 $ 1,152.00 $ 48.00$ 13.20 $ 34.80 19 $ 800.00 $ 768.00 $ 32.00$ 8.80$ 23.20 20$ 400.00 S 384.00 $ $ 16.00 $ 4.40S 11.60 21 nuuluu Year Cash After tax Cash from outflow, Taxable Tax in Cash Flow Revenue in expenses Depreciation Income in $ SMillions $Millions in in Millions Millions 27.5% rate SMillions 0 1 $ 1,800.00 $ 1,728.00 $ 50.02 $ 21.99 $ 6.05$ 65.95 2 $ 1,900.00 $ 1,824.00 $ 85.725 (9.72) S (2.67) $ 78.67 3 $ 2,000.00 $ 1,920.00 $ 61.22 $ 18.79$ 5.17$ 74.83 4 $ 2,100.00 $ 2,016.00 $ 43.72 $ 40.29 $ 11.08$ 72.92 5 $ 2,200.00 $ 2,112.00 $ 31.26 $ 56.75$ 15.60 $ 72.40 6 $ 2,300.00 $ 2,208.00 $ 31.22 $ 60.78$ 16.71 $ 75.29 7 $ 2,400.00 $ 2,304.00 $ 31.26 $ 64.75$ 17.80 $ 78.20 8 $ 2,500.00 $ 2,400.00 $ 15.61 $ 84.39 $ 23.215 76.79 9 $ 2,600.00 $ 2,496.00 $ $ 104.00 $ 28.60 $ 75.40 10 $ 2,700.00 $ 2,592.00 $ S 108.00 $ 29.70$ 78.30 11 $ 2,600.00 $ 2,496.00 $ S 104.00 $ 28.60 $ 75.40 12 $ 2,500.00 $ 2,400.00 $ S 100.00 $ 27.50 $ 72.50 13 $ 2,400.00 $ 2,304.00 $ S 96.00 $ 26.40$ 69.60 14 $ 2,200.00 $ 2,112.00 $ $ 88.00 $ 24.20 $ 63.80 15 $ 2,000.00 $ 1,920.00 $ $ 80.00 $ 22.00 $ 58.00 16 $ 1,800.00 $ 1,728.00 $ 72.00 $ 19.80$ 52.20 17 $ 1,500.00 $ 1,440.00 $ 60.00 $ 16.50 $ 43.50 18 $ 1,200.00 $ 1,152.00 $ 48.00$ 13.20 $ 34.80 19 $ 800.00 $ 768.00 $ 32.00$ 8.80$ 23.20 20$ 400.00 S 384.00 $ $ 16.00 $ 4.40S 11.60 21 nuuluu