Firm W, which has a 32 percent marginal tax rate, plans to operate a new business that should generate $40,000 annual cash flow/ordinary income for three years (years 0, 1, and 2). Alternatively, Firm W could form a new taxable entity (Entity N) to operate the business. Entity N would pay tax on the three-year income stream at a 21 percent rate. The nondeductible cost of forming Entity N would be $5,000. Firm W uses a 6 percent discount rate. Use Appendix A and Appendix B.

1. Complete the below tables to calculate NPV.
2. Should it operate the new business directly or form Entity N to operate the business?

	Year 0	Year 1	Year 2
Business operated by Firm W:
After-tax cash flow at 32% tax rate
Discount factor (6%)		0.943	0.890
Present value
NPV
Business operated by Entity N:
After-tax cash flow at 21% tax rate
Cost of forming Entity N	(5,000)	0	0
Net cash flow
Discount factor (6%)		0.943	0.890
Present value
NPV

Please help me with the rest of the table, thanks!