Use the following information to answer the last four questions:

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck. The trucks basic price is $50,000, and it will cost another$10,000 to modify it for special use by your firm. The truck falls into the MACRS three-year class, and it will be sold after three years for$20,000. Use of the truck will require an increase in net operating working capital(spare part inventory) of $2,000. the truck will have no effect on revenues, but it is expected to save the firm $20,000 per year in before-tax operating costs, mainly labor. The firms marginal tax rate is 40 percent and its WACC is 10 %.

year 1 2 3 4

MACRS Rates 33% 45% 15% 7%

1.what is the years zero total investment (initial outlay)

2.what is the after-tax salvage value cash flow?

3.what is year 2s operating cash flow?

4.what is the NPV of this project?