Your fledgling company currently manufactures cheap t-shirts that are sold to often inebriated students on Spring Break. Many of them seem to get sunburned since they dont have the sense to put on sunscreen. Thus, as a public service, you have decided to expand your product line and offer equally cheap hats. To do so will require purchasing new equipment. You have the following information on this investment project, what are the after-tax cash flows that it is expected to generate? (my answers are in thousands)

Cost of hat making machinery: $80,000

Expected life of machinery: 5 years

Expected Salvage Value of hat making machinery after 5 years: $20,000

Depreciation method: straight line

Expected sales of hats: $130,000 per year

Cost of raw material: $70,000 per year

Cost of additional labor: $30,000 per year

Additional Net Working Capital required at the start of the project: $20,000

Tax rate: 35%.

a.

-80 / 30.9 / 30.9 / 30.9 / 30.9 / 44.6

b.

-100 / 25.1 / 25.1 / 25.1 / 25.1 / 58.1

c.

-100 / 30.9 / 30.9 / 30.9 / 30.9 / 58.1

d.

-80 / 16.9 / 16.9 / 16.9 / 16.9 / 65.1

e.

-100/ 31.6 / 31.6 / 31.6 / 31.6 / 64.6