Your firm has decided to sell widgets at a hut in the Chestnut Hill Mall. The hut will cost $200,000 (year 0) and will be straight-line depreciated in years 1-5 to a book valueof $0. In years 1 through 10, annual revenues will be $80,000 and annual costs will be$40,000. In year 11, the hut will be sold for $20,000. Because many of the widgets sold in year t must be manufactured in year t -1, networking capital in year t - 1 equals 30% of the annual costs in year t. Assume that the corporate tax rate is 40%, and that the appropriate annual discount rate is 7.0%.

A) What is the salvage value associated with selling the hut at the end of year? What is the after-tax salvage value associated with selling the hut?

B) What are the cash flows associated with the change in net working capital in each of years 0-10?

C) What are the cash flows from operations in each of years 1-10?

D) What are the total cash flows associated with this project in each of years 0-10?

E) What is the NPV of this project?

F) By how much would the NPV of this project increase if the corporate tax rate were cut to 25%?