Masamora Company is considering two independent projects. One project involves a new product line, and the other involves the acquisition of forklifts for the materials handling department. The projected annual operating revenues and expenses are as follows:

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

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Project I (investment in a new product) Revenues $ 90,000 Cash expenses (45,000) Depreciation (15,000) Income before income taxes $ 30,000 Income taxes (12,000) Net income $ 18,000 Project II (acquisition of two forklifts) Cash expenses Depreciation $30,000 30,000