The Taylor Mountain Uranium Company currently has annual cash revenues of $$1\mathrm{.}2$ million and annual cash expenses of $$700,000.$ Depreciation amounts to $$200,000$ per year. These figures are expected to remain constant for the foreseeable future $($at least $15$ years$).$ The firm$$s marginal tax rate is $40$ percent.

A new high$-$speed processing unit costing $$1\mathrm{.}2$ million is being considered as a potential investment designed to increase the firm$$s output capacity. This new piece of equipment will have an estimated usable life of $10$ years and a $$0$ estimated salvage value. If the processing unit is bought, Taylor$$s annual revenues are expected to increase to $$1\mathrm{.}6$ million and annual expenses $($exclusive of depreciation$)$ will increase to $$900,000.$ Annual depreciation will increase to $$320,000.$ Assume that no increase in net working capital will be required as a result of this project. Compute the project$$s annual net cash flows for the next $10$ years, assuming that the new processing unit is purchased. Also compute the net investment $($NINV$)$ for this project.

$10.$ Nguyen Inc. is considering the purchase of a new computer system $($ICX$)$ for $$130,000.$ The system will require an additional $$30,000$ for installation. If the new computer is purchased, it will replace an old system that has been fully depreciated. The new system will be depreciated over a period of $10$ years using straight$-$line depreciation. If the ICX is purchased, the old system will be sold for $$20,000.$ The ICX system, which has a useful life of $10$ years, is expected to increase revenues by $$32,000$ per year over its useful life. Operating costs are expected to decrease by $$2,000$ per year over the life of the system. The firm is taxed at a $40$ percent marginal rate.

A$.$ What net investment is required to acquire the ICX system and replace the old system?

B$.$ Compute the annual net cash flows associated with the purchase of the ICX system.