Corporation VB was formed in 2018. Immediately prior to year end, VB is considering a $500,000 deductible expenditure. It can either make the expenditure before the end of 2018, or wait until 2019. However, if it waits the cost of the expenditure will increase to $525,000. Before considering this expenditure, VB has the following projected pre-tax cash flows and taxable income for 2018, 2019, and 2020. Use Appendix A.

	2018	2019	2020
Taxable Income and pre-tax cash flow	$120,000	$400,000	$700,000

a) Using a 5 percent discount rate, compute the NPV of VB's after-tax cashflows if the expenditure is in 2018.

b) Using a 5 percent discount rate, compute the NPV of VB's after-tax cashflows if the expenditure is in 2019.

c) Based on your calculations, when should VB make this expenditure?