1) Using your initial investment and Total Cash Flows from Question #1 calculate the following for the Project. a. Net Present Value b. Payback (Breakeven) c. Discounted Payback (Breakeven) d. Internal Rate of Return e. Profitability Index

The company can borrow at 5% for the initial purchase of the equipment.

Appendix A - Proforma Income Statement Year ('000s) 0 5 Revenues $ 80 $ 120 $ 200 $ 320 $ 480 COGS $ 40 $ 60 $ 100 $ 160 $ 240 Gross Profit $ 40 $ 60 $ 100 $ 160 $ 240 Expenses Sales Salaries & Commissions $ 8 $ 12 $ 20 $32 $ 48 General & Admin Expenses $ 12 $ 18 $ 30 $ 48 $ 72 Depreciation Expense $ 30 $ 30 $ 30 $ 30 $ 30 Total Operating Expenses $ 50 $ 60 $ 80 $ 110 $ 150 EBIT $ -10 $0 $ 20 $ 50 $ 90 Interest $ 6 $ 6 $ 6 $6 $6 EBT $ -16 $ -6 $ 14 $ 44 $ 84 Less Taxes (35%) $ -5.6 $ -2.1 $ 4.9 $ 15.4 $ 29 4 Net Income $ -10.4 $-3.9 $9.1 $ 286 $ 54-6 Operating Cash Flow $ (- 150) $ 19.6 $ 26.1 $ 39.1 $ 586 $ 846 Initial Investment $ (- 150) 0 0 0 0 Total Cash Flows $ (- 150) $ 19 6 $ 26.1 $ 39.1 $ 58.6 $ 84 6 02) a) Net Present Value = FV/ (1+r)_('000s )