The machine produces annual units of 1,000 units. Each unit has sale price of $200 per unit and cost of $100 per unit. Sale price and cost will increase 3% per year. The tax rate is 25%.

If NWCt= 12% * Sale (t+1), what is FCF at year 2?

Given the machine is bought at $200,000 with shipping cost of $10,000 and installation cost of $30,000. The machine has economic life of 4 years.

Year MACRS 1 33% 2 45% 3 15% 4 7%

1) $103,508.40 2) -$6,250 3) $102,080 4)$145,600 5)$94,080