An office is looking to install a new IT system. The new system would cost $12,000 in hardware, plus $3,000 in software, and an additional $1,000 in training. The office will probably have to take out a $12,000 loan at 5% interest annually to pay for it. The office's average tax rate is 25%.

The new system should allow for an additional $2400 annually in new sales, resulting in increased costs of goods sold of $840 and new SGA expenses of $600. As a result of the new sales, the company forecasts current assets to increase by $260 and current liabilities to increase by $80. The system is expected to last 10 years, resulting in $1,600 in new annual depreciation under the straight-line method. After 5 years of operation, the office will need to upgrade the equipment again. At the start of year 6, the hardware can probably be resold for $2,500 but the software will not be able to be recovered. (At the start of year 6, only 5 full years of depreciation have accrued.)

What is the total startup cash flows associated with this project?

What are the annual incremental operating cash flows associated with this project?

What are the total shut down cash flows associated with this project?