1. Tipan's Company is planning to invest Php 40,000 in a 3-year project. Tipan's expected rate of return is 10%. The present value of P1 at 10% for 1 year is .909, for 2 years is .826 and for 3 years is .751. The cash flow net of income taxes will be Php 15,000 for the 1^st year (PV of Php 13,635) and Php 18,000 for the 2^nd year (PV of Php 14,868).

Assuming the rate is exactly 10%, what would the cash flow, net of income taxes be for the 3^rd year?

2. Malipol Books is considering the purchase of a new binding equipment that will reduce operating costs. The cost of the equipment will be Php 70,000, which will be depreciated straight line over 5 years to a zero-salvage value. Sales are expected to increase Php 65,000 per year, with an expected cash flow earnings before depreciation and taxes/sales ratio of 60%.

What is the expected after-tax cash flows from the project if the tax rate is 40%?