QUESTION $3(20$ Marks$)$ INFORMATION Prosus Limited is replacing its existing machine with a new one. The cost of the new machine is R$1,500,000,$ and transport$/$installation costs amount to R$80,000.$ The new machine will have useful life of $4$ years and will be written down to a NIL book value. The new machine requires an additional investment in working capital of R$160,000.$ The old machine was purchased four years ago for R$1000000$ and had a $4-$year useful life. The old machine was written down to a NIL book value over its useful life. The old machine can be sold for R$100,000,$ with R$10000$ removal costs. The old machine had a working capital investment of R$90,000,$ which will be recovered upon disposal. Earnings before interest, taxes and depreciation on the new machine is as follows: Year EBITDA $1$ R$6200002$ R$6500003$ R$7100004$ R$740000$ In four years$$ time the old machine will have no resale$$ however, removal costs of R$8000$ will still need to be incurred. In four years$$ time the new machine can be sold for R$150000$ and removal costs of R$15000$ will also have to be paid. The company pays tax at $28\%.$ Assets are depreciated on a straight$-$line basis. REQUIRED $3\mathrm{.}1$ Calculate the total initial investment. $(9$ Marks$)3\mathrm{.}2$ Calculate the operating cash flows of the new machine for years $1-4.(4$ Marks$)3\mathrm{.}3$ Calculate the terminal cash flow of the asset. $(7$ Marks$)$