(After-tax cash flows; payback; NPV; PI; IRR) Forrester Fashions is considering the purchase of computerized clothes-designing software. The software is expected to cost $160,000, have a useful life of five years, and have no sal¬ vage value at the end of its useful life. Assume that tax regulations permit the following depreciation patterns for this software:

The company’s tax rate is 30 percent, and its cost of capital is 8 percent. The software is expected to generate the following cash savings and cash expenses:

a. Prepare a time line presenting the after-tax operating cash flows.

b. Determine the following on an after-tax basis: payback period, net pres¬ ent value, profitability index, and internal rate of return. LO.1 

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