The local franchise of Jiffy Lube is thinking of buying a new lift for $70,000 that would make it easier to access the oil filter in customers' cars and save labor. The savings would increase over the project's 3-year life, in line with the projected growth of the business. The machine is to be linearly depreciated to zero and will have no resale value after 3 years.

The appropriate cost of capital for this project is 16%. The company has a tax rate of 21%.

	Year 1	Year 2	Year 3
Cost savings	80,000	88,000	105,600
Depreciation	23,333	23,333	23,333
EBIT	56,667	64,667	82,267
Taxes (21%)
Net income
Depreciation
FCF

Part 1

What is the free cash flow in year 1?

Part 2

What is the free cash flow in year 2?

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Attempt 1/1 for 10 pts.

Part 3

What is the free cash flow in year 3?

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Attempt 1/1 for 10 pts.

Part 4

What is the NPV of this project?