Refer to the Web Tax Appendix to correctly answer this question. Your company, Pescow Industries, is considering a new project whose data are shown below. The required equipment will be used for 10 years during the projects life. The equipment qualifies for bonus depreciation, so it will be fully depreciated at the time of purchase. It will have zero market value at the end of Year 10, when the project would be terminated. Also, some new net operating working capital would be required to do this project, but it would be recovered at the end of the projects life. Revenues and operating costs are expected to be constant over the projects 10-year expected operating life. What is the projects cash flow in Year 10, including terminal cash flows?

Please give a DETAILED Explanation and show how you reached your answer using Excel or formulas or both.

Purchase price of equipment $80,000

Required new NOWC 15,000

Annual sales revenues 42,500

Operating costs 25,000

Tax rate 25%

a. $ 4,375

b. $13,125

c. $15,000

d. $17,500

e. $28,125