(After-tax cash flows; payback; NPV; PI; IRR) Ludwig Fashions is considering the purchase of computerized clothes designing software. The software is expected to cost $125,000, have a useful life of 5 years, and have a zero salvage value at the end of its useful life. Assume tax regulations permit the following depreci¬ ation patterns for this asset

a. Prepare a timeline presenting the after-tax operating cash flows.

b. Determine the following on an after-tax basis: payback period, net present value, profitability index, and internal rate of return.

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YEAR PERCENT DEDUCTIBLE 120 1 20 2 32 3 19 15 14 4 5 The company's tax rate is 30 percent, and its cost of capital is 8 percent. The software is expected to generate the following cash savings and cash expenses: YEAR CASH SAVINGS CASH EXPENSES 1 $40,000 $ 5,000 2 55,000 5,000 3 60,000 10,000 4 50,000 5,000 5 40,000 3,000