You can purchase a washer for $6,000 and sell your old washer for $2,000. The new washer will last for 6 years and save $1500 in expenses. The Opportunity cost of capital is 16%. The firm tax rate is 40%.

A. If firm uses straighline depreciation to an assumed salvage value of 0, what are the cash flows of project in years 0-6?

B. What is projects NPV?

C. What is NPV if the firm uses MACRS depreciation with a 5 year tax life?

MACRS Table

Year 5 year

1 20.00

232.00

319.20

4 11.52

5 11.52

6 5.76