Tippit-the-Strong Company is looking at a new sausage system with an installed cost of $300,000. This asset will be depreciated according to MACRS 5 years over the projects three-year life, at the end of which the sausage system can be sold for $90,000. The sausage system will create annual savings of $200,000 (before taxes and depreciation), and the system requires an initial investment in net working capital of $40,000. The tax rate is 30 percent.

What is the OCF in Year 3?

		$145,566
		$146,350
		$168,800
		$157,280
		$80,640

Modified ACRS Depreciation Allowances Property Class Year Three-Year Five-Year Seven-Year 1 33.33% 44.45 20.00% 32.00 19.20 14.29% 24.49 17.49 14.81 4 7.41 11.52 12.49 00 OUT WN 11.52 8.93 5.76 8.92 7 8.93 4.46