Manning Corporation is considering a new project requiring a $110,000 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 company's income tax rate is 32%. 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.) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Totals Straight-Line Depreciation $ 11,000 22,000 22,000 22,000 22,000 11,000 $110,000 MACRS Depreciation $ 22,000 35, 200 21, 120 12,672 12,672 6,336 $110,000 * The modified accelerated cost recovery system (MACRS) for depreciation is discussed in Chapter 8. 3. Compute the net present value of the investment if straight-line depreciation is used. Use 8% as the discount rate. Chart Values are Based on: 8% Year Net Cash Inflow X PV Factor Present Value 1 = 2 3 4 5 6 Net present value