B C D E F G H J K L Assignment Question Q2 The classic capital budgeting analysis for the new project line (page 4 of the Flash Memory case) is shown below. Read the 4 paragraphs under the Investment Opportunity subhead carefully. Most of the analysis is already completed. This assignment question requires you to examine the numbers and explain where they come from, and to enter the missing information in rows 29-33. CFW Chapter 5 explains the process, using the Generic Capital Budgeting Template. 8 The Flash Memory template below is much shorter but contains the same information. 10 base year ...forecast years..............." 11 ($000s) 2010 2011 2012 2013 2014 2015 12 13 Investment in equipment $2,200 14 Net working capital required (total from balance sheet each year) $5,648 $7,322 $7,322 $2,877 $1,308 $0 15 Investment in net working capital -$5,648 -$1,674 so $4,446 $1,569 $1,308 16 Sales $21,600 $28,000 $28,000 $11,000 $5,000 17 Cost of goods sold (includes depreciation) $17,064 $22,120 $22,120 $8,690 $3,950 18 Research & development $0 $0 $0 $0 19 Selling, general & administrative $1,806 $2,341 $2,341 $920 $418 20 Launch promotion $300 $0 21 Income before income taxes $2,430 $3,539 $3,539 $1,390 $632 22 Income taxes $972 $1,416 $1,416 $556 $253 23 Net income $1,458 $2,124 $2,124 $834 $379 24 Depreciation $440 $440 $440 $440 $440 25 Cash flow from operations $1,898 $2,564 $2,564 $1,274 $819 26 Total cash flow -$7,848 $225 $2,564 $7,009 $2,843 $2,127 27 Cumulative total cash flow -$7,848 -$7,624 -$5,060 $1,949 $4,792 $6,919 28 29 k-wacc Enter it from previous tab 30 NET PRESENT VALUE (NPV) 31 PROFITABILITY INDEX (PI) 32 INTERNAL RATE OF RETURN (IRR) 33 PAYBACK PERIOD (PP) By inspection