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KADS, Inc. has spent $410,000 on research to develop a new computer game. The firm is planning to spend $210,000 on a machine to produce

KADS, Inc. has spent $410,000 on research to develop a new computer game. The firm is planning to spend $210,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $51,000. The machine has an expected life of three years, a $76,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $610,000 per year, with costs of $260,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 11 percent, and it expects net working capital to increase by $105,000 at the beginning of the project.

What will the cash flows for this project be? I solved Year 0 through 2. Need help with year 3. All the information is there.

Year 0 is: ($366,000.00) Year 1 is: $224,918.76 Year 2 is: $235,576.56 Year 3: ?

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