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Benford Inc. is planning to open a new sporting goods store in a suburban mall. Benford will lease the needed space in the mall. Equipment and fixtures for the store will cost $300,000 and be deprecated over a 5-year period on a straight-line basis to $0. The new store will require Benford to increase its net working capital by $275,000 at time 0. First-year sales are expected to be $1.5 million and to increase at an annual rate of 7 percent over the expected 10-year life of the store. Operating expenses (including lease payments and excluding depreciation) are projected to be $600,000 during the first year and increase at a 6 percent annual rate. The salvage value of the store's equipment and fixtures is anticipated to be $8,000 at the end of 10 years. Benford's marginal tax rate is 40 percent. Round your answers to the nearest dollar. a. Compute the net investment required for Benford, $ b. Compute the annual net cash flows for the 10-year projected life of the store. NCF $ Year 1 2 $ $ 4 $ 5 $ 6 7 $ 8 9 $ 10 c. Compute the annual net cash flows assuming equipment and fixtures are depreciated using the 7-year asset class under MACRS. Use Table 9A-3 to answer the question Year NCF 1 10 Compute the annual net cash flows assuming equipment and fixtures are depreciated using the 7-year asset class under MACRS. Use Table 9A-3 to answer the question. NCF Year 1 $ 2 $ 3 $ 4 $ $ 5 6 $ 7 $ 8 9 10

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