Delta Software is considering a new project that will last for 3 years and whose data are shown below.

The company needs to buy a new equipment which will cost $300,000. Other depreciable costs include $25,000 in installation costs. The equipment is classified in the 3-year class and will be depreciated under MACRS (The percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively). The company believes that at the end of the 3^rd year, the equipment can be sold for $45,000.

Change in Net working capital is $45,000 which will be recovered at the end of the project.

• Annual cash flow:

Sales $250,000

Other operating costs $60,000

Tax rate 21%

What is the projects terminal cash flow (i.e. cash flow for year 3)?

What is the projects salvage cash flow? (round the answer to the nearest cent)