Manning Corporation is considering a new project requiring a $100,000 investment in test equipment with no salvage value. The project would produce $74,500 of pretax income before depreciation at the end of each of the next six years. The companys income tax rate is 40%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use MACRS) (Use appropriate factor(s) from the tables provided.)

	Straight-Line Depreciation					MACRS Depreciation
Year 1		$	10,000				$	20,000
Year 2			20,000					32,000
Year 3			20,000					19,200
Year 4			20,000					11,520
Year 5			20,000					11,520
Year 6			10,000					5,760
Totals		$	100,000				$	100,000

Required: 1. Complete the following table assuming use of straight-line depreciation. Net cash flow equals the amount of income before depreciation minus the income taxes. 2. Complete the following table assuming use of MACRS depreciation. Net cash flow equals the income amount before depreciation minus the income taxes.

3. Compute the net present value of the investment if straight-line depreciation is used. Use 8% as the discount rate.

4. Compute the net present value of the investment if MACRS depreciation is used. Use 8% as the discount rate.