ABC, Inc. has been proposed a project that requires a machine purchase for $300,000. It will cost $12,000 to ship and $25,000 to install the machine. The economic life of the machine is 4 years and it falls under the 3-year MACRS class. The machine has a $30,000 salvage value. In its first year, the project is expected to have 1,300 of annual unit sales with a unit sale price of $200 and a unit cost of $100. Both the sales price and unit cost will increase by 3% annually. The project will require 10% of sales in NWC. The company has a tax rate of 40%.

3-Year MACRS Class	3-Year MACRS Class
Year	%
1	33.33%
2	44.45%
3	14.81%
4	7.41%

(a). What is the machines annual depreciation under MACRS?

(b). What is the annual net operating cash flow for the project over the next 4 years?

(c). How much net working capital will be required over the next 4 years?

(d). What is the net terminal cash flow of the machine in year 4?

(e). What are the net cash flows for the project for the next 4 years?