Capital gains tax rate 1 015 Income tax rate 030 Depreciation straight line A firm is considering purchasing a new asset. Use the information in the chart below to find the net cash outlay for this asset/ Inputs Cost of New Asset Installation Costs Old Asset 90,000 0 Book Value 0 Proceeds on Sale 45,000 Initial Purchase Price 100,000 Decrease in Working Capital 7,000 2. The firm is projecting the cash flows in the chart below for the asset above. Find the marginal operating cash flows for this asset, assuming its useful life is three years. Inputs 1 2 3 Revenues 100,000 Revenue Inflation Rate Expenses 7.00% 7.00% 50,000 Expense Inflation Rate Operating Cash Flows, Old Asset The asset above will be sold for $20,000 at the end of its useful life. Find the terminal cash flow. 5.00% 5.00% 25,000 25,000 25,000 3. 4. Find the annual cash flow per year. Then find the IRR. 5. If the firm's cost of capital is 15%, should the firm invest in this asset? Justify your answer.