Use the following information for questions in Problem 3: After reading a demographic study on the habits and modern lifestyles of the American public, TI Inc. decided launching a new product, Gizmo T. TI's CEO has asked you to determine whether or not to go ahead with the introduction of a new product. You have the followinfction: TI's business plan is based on estimates provided by Hanover Consulting two months ago Truman has to pay consulting fee of $60,000 for this service. TI pre-paid $100,000 JCH Marketing for advertising campaign of a new product. This fee is fully reimbursable, if Truman chooses to cancel contract with JCP within 90 day period. Production line for the product will be placed in a currently unused building owned by TI Inc. with a current after-tax market value of $800,000. The warehouse has already been depreciated so its book value is zero. The new equipment will cost $1,000,000. The equipment will be depreciated on a straight line basis over 10 years to zero. You have just received the results of a marketing survey that indicates that revenues from sale of Gizmo TM will be $700,000 per year for 10 years. Variable costs will be 50% of sales per year. Fixed costs will be $120,000 per year. It is expected that at the end of year 10 you can sell this business for $400,000 TI's marginal tax rate is 30%. a) What is the appropriate amount to use as the initial cash flow (CFO)? b) What is the appropriate amount to use as the annual operating cash flows from the project (OCF)? c) Determine the after-tax salvage value of the project (the cash flow at the end of the project that comes from the sale of the project's assets)