1. Cirice Corp. is considering opening a branch in another state. The operating cash flow will be $179,800 a year. The project will require new equipment costing $550,000 that would be depreciated on a straight-line basis to zero over the 4-year life of the project. The equipment will have a market value of $149,000 at the end of the project. The project requires an initial investment of $34,000 in net working capital, which will be recovered at the end of the project. The tax rate is 34 percent. What is the project's IRR?

2. An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $15,840,000 and will be sold for $3,520,000 at the end of the project. If the tax rate is 22 percent, what is the aftertax salvage value of the asset?

3. A gym owner is considering opening a location on the other side of town. The new facility will cost $1.48 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $561,000 in annual sales. Variable costs are 48 percent of sales, the annual fixed costs are $90,900, and the tax rate is 35 percent. What is the operating cash flow?

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