ABC Inc.has started a projects which will produce unit sales of 8 units from year 1 to 5. Working capital requirement: Each year, the total investment in net working capital will equal 10% of the dollar value of sales of the next year. All working capital is liquidated at the termination of the project at the end of year 5. Total fixed costs are $15 per year, variable production costs are $11 per unit, and the units are priced at $25 each (values already entered in the table). The equipment needed to begin production has an installed cost of $300. Depreciation on project cost is to be charged on straight-line basis. In five years, this equipment can be sold for $60. ABC Inc is in the 30 percent marginal tax bracket and has a required return on all its projects of 15 percent. Based on the above information fill in the cells labeled from a to i in the table below for the calculation of project cash flows.

Find

a-Depr

b-EBIT

c-NOPAT

d-Change in WC_0

e-Change in WC_5

f-Salvage

g-CFo

h-CF (1-4)

i-CF (5)

a-Depr

b-EBIT

c-NOPAT

d-Change in WC_0

e-Change in WC_5

f-Salvage

g-CFo

h-CF (1-4)

i-CF (5)

1 2 3 4 No. of Units 5 Selling Price 6 Variable Cost 7 Working Capital 9 Cost 10 Sales 11 Variable Cost 12 Fixed Cost 13 Depreciation 14 EBIT 15 Tax 16 NOPAT 17 Depreciation 18 Change in WC 19 Salvage 20 Cash Flows 0 d g (300) 1 8 25 11 200 88 15 a b Q h MANI 2 8 25 11 200 88 15 a b 13 C h YEARS 3 8 25 11 200 88 15 a b C h 4 8 25 11 200 88 15 a b C h 5 8 25 11 200 88 15 a b C e f