ABC decides to invest $300,000. The deal they strike is as follows: 1. They are allowed to invest 1/3rd of their money on the first day of the deal (time 0), and the balance 2 years later. 2. However, due to the delayed investment, they won't get any revenue until year 2 at which time they will get $70,000, $60,000, $50,000 and $70,000 for each of years 2 through 5. 3. In addition to the revenue noted for those 4 years, they will have expenses of $30,000, $30,000, $40,000 and $30,000 for years 2 through 5 (they don't have any expenses in time 0 or year 1 other than the already described original investment). 4. They can deduct 100% of their operating expenses in year 2, 50% of their operating expenses in years 3 and 4, and 25% of their operating expenses in year 5. 5. Their revenue is fully taxable in years 2 and 4 and 5, but only 50% taxable in year 3. In year 5, they are subject to tax on the portion of the revenue that was not previously taxed in year 3. 6. At the end of the investment (time 5), they will get a return of their original investment of $350,000. Any gain or loss on the investment is taxable, if a gain, or deductible, if a loss. But, the tax rate on return of investment is only 20% 7. You cannot carry losses back or forward. 8. Their tax rate is 40% for ordinary income but not return on investment income. 9. Their discount rate is 5%. What is their NPV of their after tax cash flow for this investment? Show your work and you may get partial credit.