The Raye Corporation is considering replacing a 7-year old machine that originally cost $168,500. When the old machine was purchased it had an expected useful life of 15 years and was being depreciated using straight line depreciation to an expected salvage value at the end of the machines life of $23,500. Currently, the old machine could be sold for $90,000. The replacement machine being considered would cost $275,000, it would cost $16,000 to install and would have a 8-year expected life over which it would be depreciated using the straight line method to an expected salvage value of $45,000 at the end of its life. Also, because the new machine is extremely efficient, its purchase would result in a savings of $42,000 per year before depreciation and taxes. The firm is in the 34% marginal tax bracket and the cost of capital is 12%.

a. What is the initial investment associated with this project? What are the yearly cash-flows in years 1-8 for this new project? Show all work and label the components of your final answers