Tanha Corporation is considering a new project to manufacture automotive brick. The cost of the automotive machine set up is Tk.6,000,000. The cost of shipping and installation of the machine is an additional Tk.500,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentages are 33%, 45%, 15%, and 7%, respectively. Sales are expected to be Tk. 2,500,000 in first year and the yearly sales growth rate is 5%. Cost of goods sold will be 65% of sales. Selling and administrative expenses will be 10% of COGS. The project will require an increase in net working capital of Tk.1,500,000. At the end of third year, Tanha Corporation plans on ending the project and selling the manufacturing equipment for Tk.1,500,000. In the project terminal period working capital will be sold at Tk. 1,100,000 tk. The marginal tax rate is 30%.

Required: a) What is the initial investment outlay associated with the machine? b) What are the operating cash flows in year 1 and 2? c) What is the terminal cash flow in year 3?