Firm D is considering investing $$400,000$ cash in a three$-$year project with the following cash flows. Use Appendix A and Appendix B$.$

Year $0$ Year $1$ Year $2$

Investment$/$return of investment $ $(400,000)$ $ $0$ $ $400,000$

Revenues $80,00065,00035,000$

Expenses $(25,000)(25,000)(10,000)$

Before$-$tax net cash flow $ $(345,000)$ $ $40,000$ $ $425,000$

Required:

a$1.$ The revenue is taxable, the expenses are deductible, and the marginal tax rate is $15$ percent. Use a $10$ percent discount rate to compute NPV$.$

a$2.$ Should firm D make the investment?

b$1.$ The revenue is taxable, the expenses are deductible, and the marginal tax rate is $40$ percent. Use a $10$ percent discount rate to compute NPV$.$

b$2.$ Should firm D make the investment?

c$1.$ The revenue is taxable, only one$-$half of the expenses are deductible, and the marginal tax rate is $15$ percent. Use a $10$ percent discount rate to compute NPV$.$

c$2.$ Should firm D make the investment?

d$1.$ Firm D can deduct the expenses in the year paid $($against other sources of income$)$ but can defer recognizing the $$180,000$ total income until year $2.($It will collect the revenues as indicated in years $0,1,$ and $2$ so that before$-$tax cash flows don$$t change.$)$ The marginal tax rate is $40$ percent. Use a $10$ percent discount rate to compute NPV$.$

d$2.$ Should firm D make the investment?