Question: Maximum Inc, is considered a new six-year expansion project that requires an initial fixed asset investment of $100,000. The fixed assets will be depreciated using

Maximum Inc, is considered a new six-year expansion project that requires an initial fixed
asset investment of $100,000. The fixed assets will be depreciated using the 5-year
MACRS class. The project is estimated to generate $150,000 in annual sales, with costs
of $80,000. If the tax rate is 35% and the company uses a discount rate of 10%, what is the
present value of cash flows in year 2?

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