Question 06: TMC Inc. is considering expanding into a new variation of furniture that will use wrought iron as the main raw material. The necessary information related to the project are as follows - The project will require TMC to purchase a new equipment worth $800,000 Inventory will increase by $150,000 and accounts payable will increase by $100,000. All other working capital components will remain the same. The project will last for 4 years. The company forecast the following sales: 250,000 units in year 1; 270,000 units in year 2; 225,000 units in year 3 and 200,000 units in year 4. Each unit sales for $20 The fixed cost of the project will be $900,000 per year, and the variable cost associated with producing each unit is $15 per unit. The company uses a straight-line depreciation. For tax purpose, the asset is depreciated to zero. When the project is completed at the end of year 4, the company expects that it will be able to salvage the equipment for $40,000 and that it will fully recover the Net Working Capital. The estimated tax rate is 35%. Calculate the estimated cash flow