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Poulsen Industries is analyzing a proposed new project. The number of units that will be sold will be constant each year. The sales price for

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Poulsen Industries is analyzing a proposed new project. The number of units that will be sold will be constant each year. The sales price for year 1 is expected to equal $25/unit but is expected to increase each year thereafter at an inflation rate of 4%. Fixed costs will also be constant each year, but variable costs per unit will also increase at the inflation rate of 4% each year after year 1. The project will last for 3 years. Under the new tax law, the equipment for the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. Compute the after-tax cash flow for year 2 of the project. Do not round the intermediate calculations and round the final answer to the nearest whole number WACC 10.0% Equipment cost $200,000 Units sold each year 54,000 Average price per unit, Year 1 $25.00 Fixed op. cost excl. depr. (constant) $150,000 Variable op. cost/unit, Year 1 $20.20 Expected annual inflation rate 4.0% Tax rate 25.0% $89,676 O $85.176 O $127.176 $52,176 $81.900

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