Canadian Wilderness Company (CWC) just bought a machine that is expected to generate $35,000 in operating income before depreciation expenses each year. The machine, which has a depreciable base equal to $60,000, falls into the MACRS 3-year class, 33%, 45%, 15%, 7%, repectively.

a. Prepare a statement of cash flows for CWC. Use the table below as a guide.

	Year 1	Year 2	Year 3	Year 4
Operating Income
Less: Depreciation
Net Operating Income
Less: Taxes (40%)
After-Tax NOI
Add: Depreciation
Operating Cash Flow

b. The new machine puchased by CWC cost the company $80,000. What is the NPV and IRR of this project, if the CWC's required return in 10%? Was it a good decision?