Answer the following Questions

MACRS recovery allowance per year
	Class of Investment
Ownership year	3-year	5-year	7-year
1	33.33%	20.00%	14.29%
2	44.45%	32.00%	24.49%
3	14.81%	19.20%	17.49%
4	7.41%	11.52%	12.49%
5		11.52%	8.93%
6		5.76%	8.92%
7			8.93%
8			4.46%

Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The equipment for the project is classified as 3-year life using the MACRS depreciation, after which it would be worth nothing and thus it would have a zero salvage value. No new working capital would be required, and revenues and other operating costs would be constant over the projects 4-year life.

WACC	10.0%
Initial investment	$165,000
Sales revenues, each year	$123,000
Business expenses	$25,000
Tax rate	35%

Question 1. (Show all work for credit)

Calculate the depreciation amount for each year of the life of the equipment.\

Question 2. (Show all work for credit)

Calculate the projects NPV.