SHOW WORK: An asset in the five-year MACRS property class costs $150,000 and has a zero estimated salvage value after six years of use. The asset will generate annual revenues of $320,000 and will require $80,000 in annual labor and $50,000 in annual material expenses. There are no other revenues and expenses. Assume a tax rate of 25%. (a) Draw the before-tax cash flow (b) Calculate the depreciation for years 1-6, the resulting taxable income in each year and the taxes in each year. (c) Draw the ATCF diagram (show and label all cash flows) (d) Draw the net cash flow, determine the PW(12%), and state the decision to invest or not and why.

An asset in the five-year MACRS property class costs $150,000 and has a zero estimated salvage value after six years of use. The asset will generate annual revenues of $320,000 and will require $80,000 in annual labor and $50,000 in annual material expenses. There are no other revenues and expenses. Assume a tax rate of 25%. (a) Draw the before-tax cash flow (b) Calculate the depreciation for years 1-6, the resulting taxable income in each year and the taxes in each year. (c) Draw the ATCF diagram (show and label all cash flows) (d) Draw the net cash flow, determine the PW (12%), and state the decision to invest or not and why