Firm X has the opportunity to invest $254,000 in a new venture. The projected cash flows from the venture are as follows. Use Appendix A and Appendix B. Please show all calculations.

	Year 0				Year 1				Year 2				Year 3
Initial investment	$	(254,000	)
Revenues					$	38,400			$	38,400			$	38,400
Expenses						(23,040	)			(5,760	)			(5,760	)
Return of investment														254,000
Before-tax net cash flow		(254,000	)		$	15,360			$	32,640			$	286,640

Firm X uses an 8 percent discount rate, and its marginal tax rate over the life of the venture will be 20 percent.

1. a-1. Complete the below table to calculate NPV. Assume that the revenues are taxable income, and the expenses are deductible.
2. a-2. Should firm X make the investment?
3. b-1. Complete the below table to calculate NPV. Assume that the revenues are taxable income, but the expenses are nondeductible.
4. b-2. Should firm X make the investment?