Use the following information to answer the below. A firm buys machinery for 160,000, pays freight and installation of 40,000 and buys spare parts and inventory of 27,000. The firm uses a 3 Year ACRS table : Depreciation each year is as follows: 33% 45% 15% and 7 %. The firm expects to sell the machinery in 2 (TWO) years for 87,000. However, while it owns it for the two years, the company expects the machinery to generate revenues or 120,000 each year. Cost for the first year are expected to be 67,000 and for the second year cost will drop to 37,000. The firm is in a 30 % tax bracket.

A. What is the initial investment?

B. What is the depreciable basis?

C.What is the Remaining unused depreciation?

D. What are the Net Operating cash flows for years 1 and years 2?

E. What is the terminal cash flow?