A Firm is considering purchasing a machine that costs $65,000. It will be used for 6 years and the salvage value is expected to be zero at the end of that time. The machine will save $35,000 per year in labor, but it will cost $12,000 in operating and maintenance (O&M) costs each year. The machine will depreciate according to the five year MACRS. The firms tax rate is 40%. Complete the following financial statements for this project:

Income Statement	0	1	2	3	4	5	6
Revenues
Expenses:
O&M
Depreciation
Taxable Income
Income Taxes (40%)
Net Income
Cash Flow Statement
Operating Activities:
Net Income
Depreciation
Investment Activities:
Investment
Salvage
Gains Tax
Net Cash Flow