1. What is the undiscounted cash flow in the final year of an investment, assuming: $20,000 after-tax cash flows from operations, the fully depreciated machine is sold for $1000, the project had required $2,000 in additional working capital , and a 35% tax rate?
2. What is the present value at a 15% discount rate of the depreciation tax shield for a firm in the 35% tax bracket that purchases a $50,000 asset being depreciated straight-line over a five-year life to a zero salvage value?