Initial equipment cost	$ 55,000,000
Equipment in 1 year	$ 30,000,000
Year 1 depreciation	3.750%
Year 2 depreciation	7.219%
Year 3 depreciation	6.677%
Year 4 depreciation	6.177%
Year 5 depreciation	5.713%
	Year 2	Year 3	Year 4	Year 5	Year 6
Sales	$ 18,000,000	$ 27,000,000	$ 35,000,000	$ 39,000,000	$ 43,000,000
Variable cost	60%
Fixed cost	$ 3,500,000
NWC percentage of sales	8%
Terminal growth rate	3%
Tax rate	21%
Required return	11.000%

Year o Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Year O investment Year 1 investment Total depreciation Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Variable costs Fixed costs Depreciation EBT Tax Net income OCF New working capital: Beginning Ending NWC cash flow Year 5 cash flow S Value at end of year 5 of perpetual $ Year o Year 1 Year 2 Year 3 Year 4 Year 5 S (55,000,000) (30.000.000) Operating cash flow Capital spending Net working capital Terminal value Total cash flows NPV Profitability index IRR Year o Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Year O investment Year 1 investment Total depreciation Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Variable costs Fixed costs Depreciation EBT Tax Net income OCF New working capital: Beginning Ending NWC cash flow Year 5 cash flow S Value at end of year 5 of perpetual $ Year o Year 1 Year 2 Year 3 Year 4 Year 5 S (55,000,000) (30.000.000) Operating cash flow Capital spending Net working capital Terminal value Total cash flows NPV Profitability index IRR