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Use the following information to answer questions 17-20. Madison Technologies is considering change in its method of delivery. In order to do this, equipment would

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Use the following information to answer questions 17-20. Madison Technologies is considering change in its method of delivery. In order to do this, equipment would need to be purchased at a cost of $1,250,000 plus an additional $85,000 for shipping and installation. Madison believes that after 6 years, this equipment can be sold for $240,000. The company would need to increase its working capital by $150,000. The increase in revenue from this change is expected to be $600,000 per year with related operating costs of $320,000 per year and depreciation expense of $222,500 per year for 6 years. Madison is in the 30% tax bracket and its WACC is 9.5%. 17. What is the initial outlay for this project? 18. What are the annual recurring after-tax cash flows for this project? 19. What are the terminal cash flows for this project? Do not include Year 6 operating cash flows. 20. Should Madison change to the new delivery method? Why or why not

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