Zeon, a large profitable corporation, is considering adding some automatic equipment in its production facilities. An investment of $100,000 will produce an initial annual benefit of $39,500, but the benefits are expected to decline $4,000 per year. The firm uses Straight-Line depreciation, a 4 year useful life and $6,000 salvage value. Assume that the equipment can be sold for its $6,000 salvage value at the end of 4 years. Also assume a 46% income tax rate for state and federal taxes combined. The following After-Tax Cash Flow Table has been prepared. Before-Tax Cash Flow Straight-Line Depreciation Income Taxes Taxable income at 46% Year After-Tax Cash Flow -100,000 38,626 - 100,000 874 39,500 35,500 31,500 33,500 37,600 28,200 18,800 1,900 7,300 12,700 32,142 3,358 5,842 25,658 9.400 24,100 11,086 22,414 Is it correct? If not, why not? It is correct. It is incorrect. Wrong depreciation used. It is incorrect. The money made when the equipment is sold in not included in the last year's cash flow. It is incorrect. The after-tax cash flow is wrong