The Dingle Company is considering two independent projects. One project involves a new product line and the other involves the acquisition of forklifts for the Material-Handling De¬ partment. The projected annual operating revenues and expenses are given below;

Required:
Compute the after-tax cash flows of each project. The tax rate is 40% and includes federal and state assessments.

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Project I (investment in a new product) Revenues $60,000 Cash expenses (30,000) Depreciation (10,000) Income before taxes $20,000 Taxes (8,000) Net income $12,000 Project II (acquisition of two forklifts) Cash expenses Depreciation $20,000 20,000