Tanaka Machine Shop is considering a four$-$year project to improve its production efficiency. Buying a new machine press forEsfandiari Enterprises is considering a new three$-$year expansion project that requires an initial fixed asset investment of $$2\mathrm{.}4$ million.

The fixed asset will be depreciated straight$-$line to zero over its three$-$year tax life, after which time it will be worthless. The project is

estimated to generate $$1,980,000$ in annual sales, with costs of $$675,000.$ The project requires an initial investment in net working

capital of $$200,000$ and the fixed asset will have a market value of $$310,000$ at the end of the project.

a$.$ If the tax rate is $25$ percent, what is the project's Year $0$ net cash flow? Year $1?$ Year $2?$ Year $3?$

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your

answers in dollars, not millions of dollars, e$.$g$.,1,234,567.$

b$.$ If the required return is $18$ percent, what is the project's NPV$?$

Note: Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

Answer is complete but not entirely correct.

$$540,000$ is estimated to result in $$225,000$ in annual pretax cost savings. The press falls in the MACRS five$-$year class, and it will have

a salvage value at the end of the project of $$91,000.$ Refer to Table $8\mathrm{.}3.$ The press also requires an initial investment in spare parts

inventory of $$27,000,$ along with an additional $$3,200$ in inventory for each succeeding year of the project. The shop's tax rate is $22$

percent and the project's required return is $8$ percent. Calculate the NPV of this project.

Note: Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

Answer is complete but not entirely correct.