Answer the following questions using the information below:

Gavin inc. is in need of a computer network for their staff. They receive a proposal as below:

Proposal

Initial after-tax investment in equipment $102,000

Annual cash increase in operations:

Year 1 (before-tax) 60,000

Year 2 (before-tax) 60,00

Year 3 (before-tax)60,000

Terminal disposal value 0

Estimated life 3 years

The company uses straight-line use depreciation for capital assets.

Required rate of return = 14% tax rate = 30%

1 what are the annual cash flow from operations

1. What is the Net present value (NPV)?

3 how long is the payback period?