For a new process, the land was purchased for $10 million. The fixed capital investment, paid at the end of year 0, is $165 million. The working capital is $15 million, and the salvage value is $15 million. The estimated revenue from years 1 through 10 is $70 million/y, and the estimated cost of manufacture over the same time period is $25 million/y. The internal hurdle rate (interest rate) is 14% p.a., before taxes, and the taxation rate is 40%.

1. Draw a discrete, nondiscounted (before-tax) cash flow diagram for this process.

2. Determine the yearly depreciation schedule using the five-year MACRS method.

3. Determine the after-tax profit for each year.

4. Determine the after-tax cash flow for each year.

5. Draw a discrete, discounted (to year 0) cash flow diagram for this process.

6. Draw a cumulative, discounted (to year 0) cash flow diagram for this process.

7. What is the present value (year 0) of this process?