1- Sharon runs a side business of teaching kids (and adults who are young at heart) how to lasso tree stumps, branches, and other inanimate objects for fun. Preliminary analysis on her so-far-so-good revenues (which are essentially pure profit to her) indicates a positive NPV of $26,000.

If she ran this analysis based on 7 years of productivity, using a 5% discount rate and a 23% tax rate, what annual before-tax cash flow did she use?

Annual before-tax cash flow $ =

(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36.)

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2- If she wants to cut back on her time dedicated to this business, what amount of revenue (before-tax) could she earn and still have an NPV of $7,800?

Annual before-tax cash flow $ =

(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places e.g. 5,125.36.)