The following data apply to the next three questions.

You have been asked to evaluate the proposed acquisition of a new machine to expand your companys product line. The machines purchase price is $740,000. It would be depreciated straight-line, down to zero, over four years. Purchase of the machine would require an increase in net working capital of $100,000. The machine would generate $400,000 before-tax revenues per year but would have operating costs of $150,000 per year. The machine is expected to be used for 3 years and then be sold for $185,000. The firms marginal tax rate is 40%, and the projects cost of capital is 12%.

13. What is the initial (t=0) cash outflow?

a. $680,000 b. $840,000

c. $815,000 d. $720,000

14. What is the total project cash flow at t=1?

a. $150,000 b. $222,000

c. $224,000 d. $237,000

15. What is the total project cash flow at t=3?

a. $484,000 b. $317,000

c. $497,000 d. $509,000