TDK corp. capital budgeting

Existing:

salary and benefits for one full time operator- $35,000

cost of maintenance- 3,000 per year

cost of defects- 7,000 per year

original cost of old machine - 125,000

annual depreciation- 13,000 per year

current salvage value- 75,000

current age of machine- 4 years

Proposed:

cost of new machine- 160,000

instalation and shipping fees- 24,000

cost of maintenance- 4,000 per year

cost of defects- 3,000 per year

expected life- 6 years

salvage value at end of machines life- 33,000

depreciation method is straight line

also, the new machine will require TDK to increase their inventory level by $90,000 and also increase their current liabilities by $60,000. Prior to purchasing a new machine, TDK Paid a marketing consultant $8500 to determine the potential for new market share associated with replacing the old machine with a new machine with greater production capabilities. It should also be noted that a local merchant paid $7000 per year to use TDKs Old machine during after hours for the production of their product. The merchant indicates that the new machine will not be suitable for her production process and therefore will discontinue the lease payment. Assuming TDK is in the 21% marginal tax bracket, calculate the initial investment and yearly cash flows associated with the new machine. Label all of your cash flow estimates