Shalash Brewery is a rapidly growing craft brewery in Western Kentucky. It has a patented process for aging its beer in wood chips from box elder trees.  Because of the booming sales, Shalash is planning to open a new distribution center Hazard, Kentucky. This distribution center is expected to have a useful life of 10 years. Shalash has contracted to lease this facility for $200,000 per year. The cost of equipment for the warehouse is estimated to be $1.3 million. This equipment will be depreciated as a 7-year life MACRS asset. The salvage value of the equipment is expected to be $250,000 at the end of year 10. Cost savings associated with operating this facility are expected to be $400,000 per year for the first 5 years, $300,000 per year for the next 3 years, and $250,000 per year thereafter. (The cost savings DO NOT include the cost of the lease payments, so be sure to include the lease payments as an operating expense in your cash flow calculations.) There will be net working capital investments required totaling $100,000 in year 1, $50,000 in year 2, and $25,000 in year three. Shalash's marginal ordinary tax rate is 40 percent. It pays 20% for any realized capital gains.

a. Compute the project's net cash flows in year 10 assuming that the facility will be closed at the end of year 10.