Your company has spent $180,000 on research to develop a new computer game. The firm is planning to spend $50,000 on a machine to produce the new game. Shipping and installation costs of $5,000 for the machine will be capitalized and depreciated. The machine has an expected life of five years, a $25,000 estimated resale value, and falls under the MACRS five-year class life. Revenue from the new game is expected to be $300,000 per year, with costs of $100,000 per year. The firm has a tax rate of 35 percent, an opportunity cost of capital of 14 percent, and it expects net working capital to increase by $50,000 at the beginning of the project. What will be the operating cash flow (OCF) for year two of this project?

MACRS rates:

Year 1: 20.00%

Year 2: 32.00%

Year 3: 19.20%

Year 4: 11.52%

Year 5: 11.52%

Year 6: 5.76%

answer choices

$ 68,150

None of these are correct.

$ 70,040

$ 136,160

$ 133,850