1.) The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $ 80,000, and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in net operating working capital of $ 5,000. The computer would increase the firm's before-tax revenues by $30,000 per year but would also increase operating costs by $ 16,000 per year. The computer is expected to be used for 3 years and then be sold for $25,000. The firm's marginal tax rate is 40 percent, and the project's cost of capital is 14 percent. What is the net cash flow at t = 0? (Must be a negative number.)

2.) The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $40,000, and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in net operating working capital of $ 6 ,000. The computer would increase the firm's before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 3 years and then be sold for $ 20 ,000. The firm's marginal tax rate is 40 percent, and the project's cost of capital is 14 percent. What is the total value of the terminal year non-operating cash flows at the end of Year 3?

Year	MACRS %
1	0.33
2	0.45
3	0.15
4	0.07

3.) Mars Inc. is considering the purchase of a new machine that costs $60,000. This machine will reduce manufacturing costs by $5,000 annually. Mars will use the MACRS accelerated method (shown below) to depreciate the machine, and it expects to sell the machine at the end of its 5-year life for $10,000. The firm expects to be able to reduce net operating working capital by $15,000 when the machine is installed, but the net working capital will return to the original level when the project is over (i.e., after 5 years). Mars's marginal tax rate is 40 percent, and it uses a 12 percent cost of capital to evaluate projects of this nature. Calculate the net cash flows of the project. (Cash outflows should be negative number.)

Year	MACRS Percentage
1	0.20
2	0.32
3	0.19
4	0.12
5	0.11
6	0.06