40 A B C E F G H J K M N 41 42 Net working capital Beginning NWC 43 End of year NWC 44 NWC cash flow Year 1 Year 2 $ 43,000 $ 43,000 Year 3 43,000 $ 63,700 Year 4 63,700 $ 65,500 Year 5 65,500 $ $ 20,700 $ 1,800 $ (65,500) 45 46 47 Pretax salvage value $ 92,000 48 Taxes on sale 3,754 49 Aftertax salvage value $ 88,246 50 51 52 Year 1 Year 2 Year 3 Year 4 Year 5 53 Sales revenue $ 430,000 $ 637,000 $ 655,000 $ 556,000 54 Operating costs 326,000 374,300 378,500 355,400 55 Depreciation 92,000 147,200 88,320 52,992 56 Income before taxes $ 12,000 $ 115,500 $ 188,180 $ 147,608 57 Taxes 3,600 58 Net income $ 8,400 $ 34,650 80,850 $ 56,454 131,726 $ 44,282 103,326 59 60 61 62 63 64 65 EBIT Depreciation Taxes 66 Cash flow from operations 67 Equipment 68 69 70 Opportunity Cost (Farm) Expense associated with Farm Restoration Net working capital Cash Flows (change of NWC) 71 Total cash flow of project 72 73 NPV 74 $ Year O Year 1 Year 2 Year 3 Year 4 Year 5 $ 12,000 $ 115,500 $ 188,180 $ 147,608 92,000 147,200 88,320 52,992 3,600 34,650 56,454 44,282 $ 100,400 $ 228,050 $ 220,046 $ 156,318 $ (460,000) 88,246 (15,000) (15,000) (15,000) (15,000) 235,000 (80,000) $ (43,000) (503,000) $ 20,700 85,400 $ 192,350 $ 1,800 203,246 $ (65,500) 295,064 $ 155,000 IRR 184,081 Payback 22% $ 1.07 75 76 77 78 79 80