7. Turner Video will invest $86,500 in a project. The firm’scost of capital is 10 percent. The investment will provide thefollowing inflows. Use Appendix A for an approximate answer butcalculate your final answer using the formula and financialcalculator methods.

Year	Inflow
1	$	29,000
2		31,000
3		35,000
4		39,000
5		43,000

The internal rate of return is 12 percent.

a. If the reinvestment assumption of the netpresent value method is used, what will be the total value of theinflows after five years? (Assume the inflows come at the end ofeach year.) (Do not round intermediate calculations andround your answer to 2 decimal places.)

	Total valueof inflows

b. If the reinvestment assumption of theinternal rate of return method is used, what will be the totalvalue of the inflows after five years? (Use the giveninternal rate of return. Do not round intermediate calculations andround your answer to 2 decimal places.)

	Total valueof inflows

11. An asset was purchased three years ago for $100,000. Itfalls into the five-year category for MACRS depreciation. The firmis in a 30 percent tax bracket. Use Table 12–12.

a.Compute the tax loss on the sale and the related tax benefit if theasset is sold now for $13,060. (Input all amounts aspositive values. Do not round intermediate calculations and roundyour answers to whole dollars.)

	Tax loss on the sale Tax benefit

b.Compute the gain and related tax on the sale if the asset is soldnow for $52,060. (Input all amounts as positive values. Donot round intermediate calculations and round your answers to wholedollars.)

	Taxable gain Tax obligation