The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $273,000 and cash expenses by $134,000. The initial investment will require $120,000 in fixed assets that will be depreciated using the 5-year MACRS. The company has a marginal tax rate of 35 percent. What is the project OCF in year 2? Please show your work so I can see how you got the solution.

MACRS 5-year property

Year Rate

1 20.00%

2 32.00%

3 19.20%

4 11.52%

5 11.52%

6 5.76%