Table 1

Year	MACRS	Depreciation	Book Value
1	33%	221,100	448,900
2	45	301,500	147,400
3	15	100,500	46,900
4	7	46,900	0
	100	670,000

See years 1 and 4 as examples in Table 1. In year 1, 3 X 425,000 = 1,275,000 637,500 221,100 20,000 = 396,400 158,560 = 237,840 + 221,100 = 458,940 = project NCF = after tax, end-of-year cash inflows, CFt. In year 4, 3 X 425,000 = 1,275,000 637,500 46,900 20,000 = 570,600 228,240 = 342,360 + 46,900 = 389,260.

Should the project be undertaken? Fill in X's

	Y 0	Y 1	Y 2	Y 3	Y 4
Unit Price		$3	X	X	$3
Unit Sales		425,000	x	x	425,000
Revenues		1,275,000	X	X	1,275,000
Operating Costs		637,500	X	X	637,500
Depreciation		221,100	X	X	46,900
Other Project Effects		20,000	X	X	20,000
Before tax income		396,400	X	X	570,600
Taxes		158,560	X	X	228,240
Net Income		237,840	X	X	342,360
Plus Depreciation		221,100	X	X	46,900
Net Op Cash Flow		458,940	X	X	389,260
Salvage Value					100,000
SV Tax					X
Recovery of NWC					X
Termination CF					X
Project NCF	X	X	X	X	X