Jupiter Corporation is planning to undertake a new project that is expected to have a 5-year economic life. The project will have an initial equipment cost of $150,000. Installation and shipping charges for the equipment are estimated at $20,000. The equipment will be depreciated straight line to zero over a five year period. A working capital investment of

$20,000 is required immediately to undertake the project. The working capital will be recovered at the end of the project. The revenues from the project in year 1 are expected to be $70,000 and remains constant till the end of the project life. Operating costs exclusive of depreciation are estimated to be $17,000 in year 1. These costs are expected to remain constant till the end of the project life. The firms marginal tax rate is 40%. The expected salvage value of the equipment at the end of year 5 is $25,000. If the firms cost of capital is 15%, should the project be undertaken?

Question: What are the annual free cash flows for this project in the first four years?