QUESTION $1$

Celebrity Food is evaluating the kale crisper project. During year $1,$ the kale crisper project is expected to have relevant revenue of $$400,000,$ relevant variable costs of $$125,000,$ and relevant depreciation of $$40,000.$ In addition, Celebrity Food would have one source of fixed costs associated with the kale crisper project. Celebrity Food just signed a deal with Lights Camera Action to develop an advertising campaign for use in the project. The terms of the deal require Celebrity Food to pay Lights Camera Action either $$80,000$ in $1$ year if the project is pursued or $$110,000$ in $1$ year if the project is not pursued. Relevant net income for the kale crisper project in year $1$ is expected to be $$200,000.$ What is the tax rate expected to be in year $1?$ Answer in decimal format, rounded to the nearest hundredth of a percent $($for example, $1\mathrm{.}23\%$ would be entered as $0\mathrm{.}0123).$

$10$ points

QUESTION $2$

Water$$s Edge Resorts is evaluating a project that would require an initial investment in equipment of $$700,000$ and that is expected to last for $4$ years. MACRS depreciation would be used where the depreciation rates in years $1,2,3,4,$ and $5$ are $40\%,30\%,20\%,5\%,$ and $5\%,$ respectively. For each year of the project, Water$$s Edge Resorts expects relevant annual revenue associated with the project to be $$379,000$ and relevant annual costs associated with the project to be $$211,000.$ The tax rate is $50$ percent. What is $($X plus Y$)$ if X is the relevant operating cash flow $($OCF$)$ associated with the project expected in year $1$ of the project and Y is the relevant OCF associated with the project expected in year $3$ of the project?