Based on the increasing theft rate in Sunset Harbor, the Harbor is planning to upgrade its security system. It is a 4 year-period project and will significantly increase Sunset Harbor's security level. The financial data is as follows:

• Investment: $45,000
• 25%debt equity ratio. Loan ($11,250) borrowed at 5% interest.
• Project life: 4 years
• Salvage value:$5,000(constant dollars, Year 0 as base year)
• Depreciation method: 3-year MACRS
• Income tax rate: 25%
• Annual Saving: $30,000 (constant dollars, Year 0 as base year)
• Annual Expense: $15,000 (constant dollars, Year 0 as base year)
• Does NOT include depreciation
• Does NOT include interest
• MARR (market interest rate): 7%

If the general inflation rate (effects revenues, expenses, salvage value) during the next 4 years is expected to be 2% annually. Round the result to the nearest integer.

1. Develop the cash flow statement for the project and answer the following questions

• The gains tax at Year 4 is
• The net cash flow at Year 4 is
• The PW of the project is