You have the following cost and revenue information on a project that invests in the conversion of a coal-fired electricity generating plant into a gas-fired unit.

Cost of new equipment: $200 million.

The equipment will be depreciated over 5 years on a straight-line basis to 20 million book value.

Proceeds from the sale of old equipment which has a book value of $10 m. is 20 million.

Expensed installation cost: 0.50 million.

Estimated Revenue from the sale of electricity in the first year: $70 million.

Cost of gas: $20 million.

Operating and other expenses: $5 million.

Initial working capital expenses: $1 million.

Projects assets estimated resale value: $40 million.

The project is subject to a tax rate of 30%.

Anticipated clean-up expense: $1 million.

Investment tax credit: 0.5 million.

Using the data, calculate the following cash flows associated with the project: (1) Net initial investment outlay; (2) Net operating cash flows (NOCF) (3) Net Salvage value.

Net initial investment outlay:

-I_o W (1-t)E₀ + [S_o t(S₀-B₀] + I_c

Net operating cash flow:

(1-t)(R C) + t(D)

Net salvage value:

S t(S B) (1 t)REX + W