Smith is determining the viability of a new product line. The new product will require a $$430,000$ piece of

equipment. Shipping and installation will cost $$40,000.$ The equipment has a $3-$year tax life, and the allowed

depreciation for such property are $33\%,45\%,15\%,$ and $7\%$ for Years $1$ through $4.$ Inventory will increase by

$$15,000,$ account payable increasing by $$8,000$ and account receivables increasing by $$10,000.$ The product

line is expected to generate annual revenue $($sales$)$ of $$132,000$ per year, with cost of goods sold being $$56,000$

per year and other costs $($excluding depreciation$)$ of $$11,000$ per year. The tax rate is $40$ percent, annual interest

expense is $$14,000$ per year, and the required return for this project is $12$ percent.

a$.$ Find depreciation for years $1,2,3,$ and $4.$

b$.$ Find year $2$ EBIT.

c$.$ Find the year $2$ free cash flow, $FC{F}_2$