What are the free cash flows in years 0 through 6 that should be used to evaluate the proposed project? (Using MACRS 5 year property class)

Equipment cost $45,000

Sales $40,000 Cost of goods sold $30,000

Gross profit $10,000

General, S&A $3,000

Depreciation $7,500 Net operating income -$500

Income tax $125 Net income -$375

Initial Investment = $10,000 (fully recovered end of year 6). Selling, general nad administrative expense = $3,000. Operating cost not recoverable= $1,000.

year	(MACRS) 5 year property class
1	20%
2	32%
3	19.20%
4	11.52%
5	11.52%
6	5.76%