Year 1	Year 2	Year 3	Year 4	Year 5
Revenues	$16,000	$20,000	$38,000	$48,000	$35,000
Less: Cash expenses	($8,000)	($5,000)	($14,000)	($19,000)	($19,000)
Less Depreciation	($3,000)	($4,000)	($3,000)	($3,000)	($3,000)
Income before tax	$5,000	$11,000	$21,000	$26,000	$13,000
Less: Tax @ 40%	($2,000)	($4,400)	($8,400)	($10,400)	($5,200)
Income after tax	$3,000	$6,600	$12,600	$15,600	$7,800
Add: Depreciation	$3,000	$4,000	$3,000	$3,000	$3,000
After tax cash flows	$6,000	$10,600	$15,600	$18,600	$10,800

Answer to problem 1 ^^

Right before opening the Lansing store discussed in problem 1, you have discovered that Fort Wayne forgot to budget 10% of revenues as a cash balance, 20% of cash expenses as an inventory balance, and 10% of cash expenses as an accounts payable balance. All of these balances would be needed at the beginning of each year and are estimated from the year-end annual estimates of revenues and cash expenses given earlier. Recalculate the cash flows for the Lansing store investment.