You are looking into new equipment that you can purhcase in order to expand your catering business. You have decided to purchase a mobile barbeque unit so that you can hire and extra team and do more cooking on site. The new piece of equipment costs $100,000 to build with another $10,000 cost associated with modifying the unit for your specific purposes. If you're going to fund this project yourself you have decided that you want to earn an annual effective return of 15%. You have a marginal tax rate of 30% A. According to your accountant you are able to choose between 2 different depreciation schedules to depreciate the new equipment (see Table 1). The equipment will be fully depreciated. Use #### to decide which depreciation schedule to use (You choose what #### is). Submit the #### of the winning depreciation schedule as your solution. (i.e. If you use the IRR to pick the best depreciation schedule, submit the winning IRR).

For Parts B - D assume that you are going to use SCHEDULE A for depreciation purposes. However, even though the machine will be depreciated over 6 years you anticipate that you will be able to use it for 7 years in total. After 7 years of use there are still people who will buy the unit off you for parts. You anticipate that you will be able to sell the unit for $2000 after using it for 7 years. You are able to use the proceeds from the sale of your chocolcate fountain to help fund the purchase of the new barbeque. It was not as big of a hit as you expected so you decided to sell it. The fountain was purchased 2 years ago for $4000 and has since been fully depreciated. You can sell it today for $1000. Since the new mobile barbeque unit will be operated by a separate team you will be able to take on more jobs each year. You will be able take on up to 100 extra jobs each year. Each time the mobile barbeque unit is booked you will earn an additional $1500 in revenue. However, since you have to hire more employees to run the second site you will also incurr additional salary expenses of $800 per job. The customers are responsible for covering food costs but you will have to cover the additional $100 in propane and petrol expenses (per job) incurred in order to operate and tow the new equipment. In addition to the aforementioned costs, the new unit will incurr an annual expense of $1000 in order to register the towing trailer. You have an annual marginal tax rate of 30% and the annual effective required rate of return associated with this project is 15%, as mentioned above.

B. What is the total cash flow for year 0 (include all relevant valuesevery cash flow for the year)?

C. What is the total cash flow for year 1 (include all relevant valuesevery cash flow for the year)?

D. What is the total cash flow for year 7 (include all relevant valuesevery cash flow for the year)?

E. How many jobs would you have to do each year in order to earn a minimum annual effective return of 15%? Round up to the nearest value.

F. What is the NPV of your project if you adjusted for mid-year discounting and you were able to take on 100 jobs over the year?

Again, assume a 15% annual effective discount rate.

Table 1	Schedule A
Year	Rate (%)
1	22.00%
2	25.00%
3	20.00%
4	16.00%
5	9.00%
6	8.00%
Sum	100.00%