Thomson Media is considering some new equipment whose data are shown below. The equipment has a 3-year tax life and would be fully depreciated by the MARCS method over 3 years, but it would have a positive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also,a reduction on net working capital would be required, but it would be recovered at the end of the project. Revenues and other operating costs are expected to be constant over the projects 3 year life. Create a table to find the following 3 answers, the projects net investment required at t=0, the projects NPV, the projects operating cash flow in year 2.

Net investment in fixed assets: 70,000

Decrease in required net operating working capital: $10,000

Depreciation MARCS year 1=33%

year 2=45%

year 3=15%

year 4=7%

Earnings before taxes & Dep=45,000

Expected pre tax sal. Value=5,000

tax rate=25%

WACC=8%