1. Windsor Co. is evaluating the proposed acquisition of a new machine, which can be used for 5 years. This machine is in asset class 9, which has a CCA rate of 30%. The machines base price is $650,000. For simplicity, we assume that no additional working capital is required during the machines economic life. The firms production department anticipates the machine will generate an additional $450,000 per year in annual operating revenue, while the associated annual operating expenses are projected to be $325,000 per year. Management estimates that at the end of 5 years, the machine can be sold for $120,000. Assume the asset class remains open after the machine is sold, and the firms cost of capital is 12%. The firms tax rate is 45%.

1. Calculate the operating cash flows each year from year 1 to year 5. (5 marks)
2. Calculate the total free cash flows at each date associated with this investment. (2 marks)