Sugar Land Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by a MBA student. The production line would be set up in unused space (Market value of zero) in Sugar Land' main plant. Total cost of the machine is $190,000. The machinery has an economic life of 4 years, and MACRS will be used for depreciation. The machine will have a salvage value of 30,000 after 4 years. The new line will generate Sales of 1,300 units per year for 4 years and the variable cost per unit is $100 in the first year. Each unit can be sold for $200 in the first year. The sales price and variable cost are expected to increase by 3% per year due to inflation. Further, to handle the new line, the firm's net working capital would have to increase by $30,000 at time zero (The NWC will be recouped in year 4). The firm's tax rate is 40% and its weighted average cost of capital is 10%.

1) Estimate annual (Year 1 through 4) operating cash flows

2) Estimate the after tax salvage cash flow