MM Ltd currently processes seafood with a unit it purchased few years ago. The unit, which originally cost $800,000, currently has a book value of $300,000. This existing unit can be sold for $500,000 today. Management is considering the option of replacing the existing unit with a brand new, high speed unit. The new unit will cost $750,000. Shipping and Installation will cost a further $50,000. Management has forecasted an initial increase in net working capital of $50,000 The additional net working capital will be recovered in full at the end of the project’s life. The new unit will be depreciated on a straight-line basis over 5 years to a zero balance. Company tax rate is 30%. Calculate the net cash flow in year 0
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