A forming die (Die A) which is used in the manufacture of your product has an acquisition cost of $70,000, a useful life of two years and an annual maintenance cost of $20,000. The die will be depreciated using MACRS with a rate of 50% per year. The die will be replaced every two years. The die has no salvage value. The firms Weighted Average Cost of Capital is 7 percent and that is considered an appropriate discount rate for this evaluation. Your firm has tax rate of 20%.

PLEASE FILL OUT THE CHART & SHOW YOUR WORK.

Information
Initial Cost	70,000
Operating Cost	20,000
Depreciation	50%/Year
Tax Rate	20%
MACRS Depreciation	Year	Year	Year
	0	1	2
MACRS Depreciation Rate		50%	50%
MACRS Recovery (Dep)
Ending NVB
OCF:
Operating Cost		-70,000	-70,000
Less on Tax Savings -		10,000	10,000
Depreciation of Tax Shield +	TR*MACRS
= OCF
CFFA:
OCF
NCS
CFFS
NPV
EAC	$47,716