K L M N o P Q R D E F G H Sales will grow at a rate so all production can be sold Advertising and promotion to get that growth will cost $50,000 per year The company has a WACC of 15% but uses a hurdle rate of 18% for projects of this risk type. 10 OUTLINE THE CASH FLOWS IN THE CHART BELOW - please note some cash flows are positive and some are negative - you will need to make sure they sum appropriately EVALUATE THE INVESTMENT WITH PAYBACK, IRR and NPV use the information in the following worksheet to evaluate a project proposal. Decide whether or not you should go forward with the investment (Ctrl) - Year CASH FLOW CALCULATIONS 0 1 2 3 4 5 6 7 8 9 Capacity of new line sales growth additional ingredients additional advertising savings from eliminating manual positions increase in income before taxes Depreciation Estimated taxes at 35% Increase in income after taxes + depc additional inventory cost of equipment cost of installation NET CASH FLOW Payback IRR ! NPV #NUM! $0.00 K L M N o P Q R D E F G H Sales will grow at a rate so all production can be sold Advertising and promotion to get that growth will cost $50,000 per year The company has a WACC of 15% but uses a hurdle rate of 18% for projects of this risk type. 10 OUTLINE THE CASH FLOWS IN THE CHART BELOW - please note some cash flows are positive and some are negative - you will need to make sure they sum appropriately EVALUATE THE INVESTMENT WITH PAYBACK, IRR and NPV use the information in the following worksheet to evaluate a project proposal. Decide whether or not you should go forward with the investment (Ctrl) - Year CASH FLOW CALCULATIONS 0 1 2 3 4 5 6 7 8 9 Capacity of new line sales growth additional ingredients additional advertising savings from eliminating manual positions increase in income before taxes Depreciation Estimated taxes at 35% Increase in income after taxes + depc additional inventory cost of equipment cost of installation NET CASH FLOW Payback IRR ! NPV #NUM! $0.00