Consider the following project being evaluated by your company:

The initial price of the assets is $$250,000$ and will require $$20,000$ transportation and $$5,000$ installation.

Will be depreciated $\frac{S}{L}$ over $7$ years to zero salvage.

Market value for the asset at end of $5$ years is expected to be $$40,000($the asset will be operated for only $5$ years$)$

Net investment in NWC in year $0($at the initial period$)$ of $$35,000$

Sales, in the first year, are expected to generate $$170,000.$

Annual cost of goods sold $75\%$ of sales.

Annual sales growth rate $3\%$

Marginal tax rate $30\%$

Cost of capital $10\%$

Calculate the depreciable base for the asset.

Calculate the project's cash outflow in year $0($Initial outlay$)$

Calculate Annual operating cash flows for year $1-5($OCF$)$

Calculate the asset's after$-$tax salvage in year $5.$

Calculate the project's net present value $($NPV$)$ and internal rate of return $($IRR$)$

Check points:

NI in year $2=3,142\mathrm{.}50$

$\frac{?}{PI}=0\mathrm{.}70$

Bonus: What is the $2^{nd}$ year depreciation tax shield?