Kima Kitchen is evaluating the marble insignia project. The project would require an initial investment of $93000 that would be depreciated to $21000 over 6 years using straight-line depreciation. The first annual operating cash flow of $26000 is expected in 1 year, and annual operating cash flows of $26000 are expected each year forever. Kima Kitchen expects the project to have an after-tax terminal value of $172000 in 3 years. The tax rate is 25% What is (X+Y)/Z if X is the project's relevant expected cash flow for NPV analysis in year 3, Y is the project's relevant expected ash flow for NPV analysis in year 4 and Z is the project's relevant expected cash flow for NPV analysis in year 2?

1. A number equal to or greater than 5.25 but less than 6.85

2. A number equal to or greater than 6.85 but less than 8.05

3. A number equal to or greater than 8.05 but less than 9.25

4. A number equal to or greater than 9.25 but less than 10.45