**Calculate Expected Cash Flows, NPV, and Present Value for opening a UPS Store Franchise** Specifically calculate the following: 1. Expected cash flows given forecasted profit 2. Present value and net present value Discount rate is 15%
Particulars		Year 1	Year 2	Year 3	Year 4	Year 5
Sales Units		10,000	12,000	14,400	17,280	20,736
Selling Price Per Unit		20	20	20	20	20
Sales A-		200,000	240,000	288,000	345,600	414,720
Less Variable Costs
Direct Materials @ 4 per unit		40,000	48,000	57,600	69,120	82,944
Direct Labor @ 5 per unit		50,000	60,000	72,000	86,400	103,680
Variable overheads @3		30,000	36,000	43,200	51,840	62,208
Total Variable cost -B		120,000	144,000	172,800	207,360	248,832
Contribution -C = (A+B)		80,000	96,000	115,200	138,240	165,888
Less: Fixed Costs		100,000	100,000	100,000	100,000	100,000
Profit		-20,000	-4,000	15,200	38,240	65,888
Assumptions:
Sales in the first year is 10,000 units
Selling price per unit is 20
Sales increase every year by 20%
Direct material cost is 4 per unit
Direct labor cost is 5 per unit
Variable overhead rate per unit is 3 per unit
Fixed costs are 100,000 remaining the same throughout the 5 year projection