Mars Inc. is considering a $5-$year project that requires a new machine that costs $$66,000,$ and an additional net working capital of $$4,000,$ which will be recovered when the project ends in $5$ years. This project would increase the firm's revenues by $$30,000$ per year and its operating costs by $$12,000$ per year. Mars will use the $3-$year MACRS to depreciate the machine, and it expects to sell the machine at the end of the project for $$16,000.$ The firm's marginal tax rate is $26$ percent, and the project's cost of capital is $14$ percent. What is the net cash flow at year $5,$ the final year? MACRS $3-$year schedule is as follows: $33\%,45\%,15\%,$ and $7\%$ for years $1$ to $4,$ respectively.

Question $14$ options:

$$27,820$

$$28,120$

$$28,660$

$$29,160$

$$29,620$

$$29,980$

The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $$60,000,$ and it falls into the MACRS $3-$year class. Purchase of the computer would require an increase in net operating working capital of $$2,000.$ The computer would increase the firm's before$-$tax revenues by $$29,000$ per year but would also increase operating costs by $$20,000$ per year. The computer is expected to be used for $3$ years and then be sold for $$25,000.$ The firm's marginal tax rate is $40$ percent, and the project's cost of capital is $14$ percent.

What is the operating cash flow in Year $2?$ Round it to a whole dollar, and do not include the $ sign.

Year MACRS

Percent

$10\mathrm{.}33$

$20\mathrm{.}45$

$30\mathrm{.}15$

$40\mathrm{.}07$