The firm is projecting the cash flows in the chart below for the asset above. Find the marginal operating cash flows for this asset, assuming its useful life is three years. The asset costs $90,000.

Inputs	1	2	3
Revenues	100,000
Revenue Inflation Rate		7.00%	7.00%
Expenses	50,000
Expense Inflation Rate		5.00%	5.00%
Operating Cash Flows, Old Asset	25,000	25,000	25,000

The asset above will be sold for $20,000 at the end of its useful life. Find the terminal cash flow.

Find the annual cash flow per year. Then find the IRR.

If the firm's cost of capital is 15%, should the firm invest in this asset? Justify your answer.