Your answer: + Question 15 (CHAPTER 10) A company is considering a 2-year project that requires paying $5,000,000 for a cutting-edge production equipment. This equipment falls into the 3-year MACRS class and will have a market value of quarter its original purchase price after 2 years. The project requires an initial investment in net working capital of $350,000. The project is estimated to generate $1,200,000 in annual operating cash flows. The company faces a 40% tax rate. The required rate of return on projects like this one is 10 percent. Property Class Year Three-Year Five-Year Seven-Year 2 33.33% 44.44 14.82 7.41 20.00% 32.00 19.20 11.52 11.52 5.76 14.29% 24.49 17.49 12.49 8.93 8.93 8.93 4.45 6 7. 8 Based on this information, answer the following questions. (Increase decimal places for any intermediate calculations, from the default 2 to 6 or higher. Only round your final answer to TWO decimal places: for example, 10,000.23.) The After-Tax Salvage Value of the production equipment at the end of the 2nd year equals: (a) $2,460,000 (b) $1,944,600 (c) $1,648,400 (d) $1,194,600 (e) $898,400 The change in Net Working Capital at the end of the 2nd year equals: (a) $1,050,000 (b) $700,000 (c) $350,000 (d) $0 (e) -$350,000