Complete the incremental cash flows work sheet for each project. You are provided with an Excel worksheet for each project that lists the initial variable costs per unit, total fixed costs, depreciation expense and number of units sold. These are incurred on a quarterly basis (i.e. m = 4). The sales price and almost all associated costs and expenses are expected to grow at an annual rate of 3% per year over the life of each project. Depreciation expense will remain constant. The number of units sold for Project 1 is expected decrease at an annual rate of 7.5000%. The number of units sold for Project 2 is expected increase at an annual rate of 9.5000%. The number of units sold for Project 3 is expected increase at an annual rate of 4.000%. The profits of all projects are taxed at an annual rate of 35%. Project 1
Period	0	1	2	3	4	5	6	7	8	9	10	11	12
Variable Costs per Unit
Raw Materials		$9.00
Manufactured Components		$22.00
Purchased Components		$35.00
Labor		$22.00
Internal Transp. & Storage		$0.50
Energy		$1.25
Total Variable Costs Per Unit		$89.75
Sales Price Per Unit		$150.25
Units Sold		30,000
Total Sales		$4,507,500
Total Variable Costs		$2,692,500
Total Fixed Costs		$90,000
Total COGS		$2,782,500
Gross Profit		$1,725,000
Gen, Sales & Admin Expense		$5,000
Depreciation		$40,000
EBIT(Earn. Before Int. & Tax)		$1,680,000
Income Tax		$588,000
Incremental Earnings		$1,092,000
Depreciation Add Back		$40,000
Incremental Free Cash Flow	-$5,485,000	$1,132,000
Units Sold Growth per yr.	-7.50%
Costs Growth/Decline per yr.	3.00%
Tax Rate	35.00%
Payment per year	4