Benford Inc. is planning to open a new sporting goods store in a suburban mall. Benford will lease the needed space in the mall. Equipment and fixtures for the store will cost $400,000 and be depreciated over a 5-year period on a straight-line basis to $0. The new store will require Benford to increase its net working capital by $400,000 at time 0. First-year sales are expected to be $1.9 million and to increase at an annual rate of 9 percent over the expected 10-year life of the store. Operating expenses (including lease payments and excluding depreciation) are projected to be $800,000 during the first year and increase at a 8 percent annual rate. The salvage value of the stores equipment and fixtures is anticipated to be $12,000 at the end of 10 years. Benfords marginal tax rate is 40 percent. Round your answers to the nearest dollar.

1. Compute the net investment required for Benford.

   $

2. Compute the annual net cash flows for the 10-year projected life of the store.

   Year	NCF
   1	$
   2	$
   3	$
   4	$
   5	$
   6	$
   7	$
   8	$
   9	$
   10	$

3. Compute the annual net cash flows assuming equipment and fixtures are depreciated using the 7-year asset class under MACRS. Use Table 9A-3 to answer the question.

   Year	NCF
   1	$
   2	$
   3	$
   4	$
   5	$
   6	$
   7	$
   8	$
   9	$
   10	$