4. Consider an asset that costs $640,000 and is depreciated straight-line to zero over its eight-year tax life (annual depreciation = 80,000). The asset is to be used in a ve-year project; at the end of the project, the asset can be sold for $175,000. The tax rate is 35 percent. a. What is the book value at the end of the project (at the end of Year 5)? (Hint: BV= acquisition cost accumulated depreciation) b. What is the after-tax cash ow from the sale of this asset (after-tax salvage value)? 5. Bruno's Lunch Counter is expanding and expects operating cash ows (OCFS) of $26,000 a year for 4 years as a result. This expansion requires an initial investment of $80,000 in new xed assets at Year 0. These assets will be worthless at the end of the project. There is an initial investment of $10,000 in net working capital in Year 0. The net working capital will be liquidated at the end of the project. a. Fill out the following table. ___'-- ----- o Hint: project cash ow = OCF Net capital spending chg. In NWC, I For example, if OCF=100; NCS= 2,000; Chg. In NWC = -50, Project cash ow = 100 2,000- (-50)= -1,850 b. What is the net present value (NPV) of this expansion project at a required rate of return of 10 percent? Should the company accept the project? c. What is the protability index (PI) of this expansion project at a required rate of return of 10 percent? (1. What is the IRR of this expansion project