7. ABC Corp. is considering opening up a new store. The project is to be evaluated based on following information. All numbers are in '000 dollars. The building would have an up-front cost of $2100, this will be depreciated over 7 years using straight line depreciation. Depreciation each year is S3 00. The department will be open for 5 years. At t-5, the company plans to sell the store for an estimated pre-tax salvage value of $1500. * The company also requires spending S500 in cash at t-0 in working capital (WC). Att-5, the company will recover this $500 The store is expected to generate sales revenue of $1500 per year at the end of each of the next five years. Operating cost (excluding depreciation) are expected to be $1000 per year. Tax rate is 40%. WACC is 10%. Tax Consideration on Salvage Value (5 marks) b. What is the net Cash Flow at the end of each of the 5 years? (10 marks) Cash Flow Forecast Year 0 Year 1 Year 5 Year 2 Year 3 Sales revenues Cost Depreciation EBIT Taxes on operating profit Up-front cost Salvage value Tax on salvage val. (from part a) Cash flow due to change in wc Project cash flows: Time Line c