Use the following to answer the next three questions:

The Wall, Co. is considering the purchase of some new machinery. The new machinery costs $60,000. The machinery falls into the MACRS three-year class, and it will be sold after four years for $10,000. The depreciation percentages each year are: Year 1 = 33%, Year 2 = 45%, Year 3 = 15%, Year 4 = 7%. The machinery will require The Wall to increase its working capital by $4,600 which will be recovered at the end of the machinery's life. The machinery has a four year life and will increase The Wall's revenues by $100,000 and costs by $50,000 for each year of the project's four year life. The Wall has a 12% cost of capital and has a 20% tax rate.

What is the initial cash outflow for this project?

a) $60,000

b) $64,600

c) $4,600

d) $74,600

What is the cash flow in year 2 for the project?

a) $45,400

b) $43,960

c) $41,800

d) $85,400

What is the total cash flow in year 4 of the project?

a) $40,840

b) $43,440

c) $53,440

d) $48,840