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Question: Excel Precision Inc. spent $450,000 on research to develop a new product. The company plans to spend $500,000 on a machine to produce the new product. Shipping and installation costs for the machine will be $95,000. The machine has an expected life of two years, an estimated resale value of $150,000, and falls under the MACRS 5-year class life. Revenue from the new product is expected to be $1,500,000 per year, with fixed costs of $650,000 per year. The firm has a tax rate of 30 percent, an opportunity cost of 13 percent, and expects its net working capital to increase by $300,000 at the beginning of the project. What will the cash flows associated with this project be?

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