Shrek Casting Company is considering adding a new line to its product mix. The production line would be set up in unused space in Shrek's' main plant. The machinery's invoice price would be approximately $200,000; another $10,000 in shipping charges would be required; and it would cost an additional $30,000 to install the equipment. The machinery has an economic life of 4 years, and would be a class 8 with a 20% CCA rate. The machinery is expected to have a salvage value of $20,000 after 4 years of use.

The new line would generate incremental sales of 1,300 units per year for four years at an incremental cost of $125 per unit in the first year, excluding depreciation. Each unit can be sold for $225 in the first year. The sales price and cost are expected to increase by 3% per year due to inflation. Further, to handle the new line, the firm's net operating working capital would have to increase by an amount of $37,000. The firm's tax rate is 31%, and its overall weighted average cost of capital is 10 percent.

A. Utilize the Components Cash Flows Approach to analyze Shrieves new product project

B. Initial Outlay

C. Operating Cash Flows

D. Ending Cash Flows

E. NPV of CCA Tax Shield