The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computers price is $40,000, and it falls in the MACRS 3-year class. The applicable depreciation rates are 33 percent, 45 percent, 15 percent, and 7 percent. Purchase of the computer would require an increase in net operating working capital of $2,000. The computer would increase the firms before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for three years and then sold for $25,000. The firms marginal tax rate is 40 percent, and the projects cost of capital is 14 percent. Use the following MACRS schedule:

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

A colleague points out that you have not accounted for inflation in your model. If you assume inflation begins today and is 5% for price inflation and 3% for cost per unit inflation, what is the total cash flow in the third year?