A firms investment in capital equipment requires an initial cash outflow of $250,000.

The tax rate (t) is 40%.

Given the 3-year life of the equipment, the depreciation schedule is as follows: Year 1, $83,250; Year 2, $111,250; Year 3, $37,000; and Year 4, $18,500.

The equipments cash income and cash expense data is shown below.

Operating Cash Income_t (OI_t) is 200,000 per year, years 1 to 3.

Operating Cash Expense_t (OE _t) is $75,000 per year, years 1 to 3.

This investments Traditional method Net Cash Flow for year 2 is:

	a.	$8,250
	b.	$119,500
	c.	$13,750
	d.	it is necessary to know how the project is financed