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KADS, Inc. has spent $490,000 on research to develop a newcomputer game. The firm is planning to spend $290,000 on a machineto produce the new game. Shipping and installation costs of themachine will be capitalized and depreciated; they total $59,000.The machine has an expected life of three years, a $84,000estimated resale value, and falls under the MACRS 7-year classlife. Revenue from the new game is expected to be $690,000 peryear, with costs of $340,000 per year. The firm has a tax rate of40 percent, an opportunity cost of capital of 12 percent, and itexpects net working capital to increase by $145,000 at thebeginning of the project. What will the cash flows for this projectbe? I can calculate everything, but I don't understand how thechange in fixed assets in year 3 is calculated, I see that thecalculation is $84,000+(68618*.4) = -$111,447.08, but where did$68618 come from?