65. (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 a zero salvage value at the end of its useful life. Assume tax regulations permit the following depreciation patterns for this asset:

Year Percent Deductible 1 20 2 32 3 19 4 15 5 14 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:

Cash Year Cash Savings Expenses 1 $60,000 $ 9,000 2 67,000 7,000 3 72,000 13,000 4 60,000 8,000 5 49,000 5,000

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

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