10.The firm is planning to spend $20,000 on a machine to produce the new game.Shipping and installation costs of the machine will be capitalized and depreciated; they total $1,000.The machine has an expected life of 3 years, a $2,000 estimated resale value, and falls under the MACRS 3-Year class life. Revenue from the new game is expected to be $50,000 per year, with costs of $30,000 per year (excluding depreciation). The firm has a tax rate of 20 percent, an opportunity cost of capital of 10 percent, and it expects net working capital to increase by $5,000 at the beginning of the project.What will be the net cash flow for year one of this project?

11.Compute the Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent and the maximum allowable payback is 5 years.

TIME:012345 CASH FLOW:- 300- 200200200200250

12.Compute the NPV for Project Y and accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent.

TIME:012345

CASH FLOW:- 300- 200200200200250