Etonic Inc. is considering an investment of $500,000 in an asset with an economic life of 5 years. The firm estimates th

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Etonic Inc. is considering an investment of $500,000 in an asset
with an economic life of 5 years. The firm estimates that the
nominal annual cash revenues and expenses at the end of the first
year will be $400,000 and $100,000, respectively. Both revenues and
expenses will grow thereafter at the annual inflation rate of 3
percent. Etonic will use the straight-line method to depreciate its
asset to zero over five years. The salvage value of the asset is
estimated to be $60,000 in nominal terms at that time. The one-time
net working capital investment of $50,000 is required immediately
and will be recovered at the end of the project. The nominal
discount rate for all cash flows is 12 percent. All corporate cash
flows are subject to a 28 percent tax rate. What is the project’s
total nominal cash flow from assets in each year?