ABC Inc. is evaluating a project that will increase annual sales by $175,000 and annual cash costs by $98,000. The project will initially require $130,000 in fixed assets that will be depreciated straight-line to a zero book value over the 4-year life of the project. The applicable tax rate is 32 percent.

(Input all answers as values with no commas, with no symbols ex. no $ or %. Input all % answers as whole numbers without symbols ex. 10.03 for .1003. Input all final answers two decimal places out.)

a. What is the depreciation tax shield? (Hint: Use straight-line depreciation to find annual depreciation)

b. Using the straight-line depreciation method, what is the book value of the asset at the end of year 2?

c. The asset for the project is classified as a 5-year property for MACRS. What is the book value of the asset at the end of year 4?

d. ABC Inc. has determined that it requires $20,000 in NWC, has a required rate of return of 12%, and plans on using the operating cash flow from problem 19 to evaluate its project. What is the NPV? U(Hint: Include NWC at the beginning and end of the project)