QUESTION 3 A company is considering a 3-year project with an initial cost of $876,000. The project will not directly produce any sales but will reduce operating costs by $198,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, 2449, .1749, .1249, 0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $410,000. The tax rate is 25 percent and the required return is 10 percent. An extra $42,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3? O $641,071.80 O $632,071.80 O $623,071.80 $614,071.80 $605,071.80 Sint Answ QUESTION 4 Mochidoki is considering the launch of an advertising campaign for its latest dessert product, Ube Mochi. Kokomochi plans to spend $750,000 on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Ube Mochi by $3 million this year. In addition, the company expects that new consumers who try the Ube Mochi will be more likely to try Mochidoki's other products. As a result, sales of other products are expected to rise by $2 million this year. Mochidoki's gross profit margin for the Ube Mochi is 30%, and its gross profit margin averages 20% for all other products. The company's marginal corporate tax rate is 25%. What is the incremental earnings associated with the advertising campaign? You need to show not only the final result but also your work in order to earn full credit for the question. Below is an example of earnings calculation for a 100% equity-financed firm for your reference. Income Statement Sales $100 Costs of goods sold $40 Gross Profit 60 Selling, General & Admin (including advertising costs) -10 Depreciation. EBIT Tax (@20%) Net Income albar nace ALT+F10 (PC) or ALT+FN+F10 (Mac). -5 45 -9 $36