REX currently has two products, low and high priced stoves. REX Inc. has decided to sell a new line of medium-priced stoves. Sales revenues for the new line of stoves are estimated at $600 a year. Variable costs are 75% of sales. The project is expected to last 10 years. Also, non-variable costs are $50 per year. The company has spent $10 in research and a marketing study that determined the company will have synergy gains/sales of $30 a year from sales of its existing high-priced stoves. The production variable cost of these sales is $50 a year. The plant and equipment required for producing the new line of stoves costs $900 and will be depreciated down to zero over 20 years using straight-line depreciation. It is expected that the plant and equipment can be sold (salvage value) for $120 at the end of 10 years. The new stoves will also require today an increase in net working capital of $40 that will be returned at the end of the project.

The tax rate is 12 percent and the cost of capital is 35%.

6. What is the cash flow due to tax on salvage value for this project?

7. What is the project's cash flow for year 10 for this project?