Net Present Value/Cash Flow Estimation problem. (View attached pictures)

FINA 440 Net Present Value Yummy Foods Yummy Foods is considering a new salsa product. Best guess numerical information is provided below. The equipment that would be used has a 4-year tax life, would be depreciated by the straight line method over the project's 4-year life, and would have zero salvage value. Net working capital would increase by 3% of any new sales. Revenues are expected to start at $60,000, grow to $80,000 in year 2 and increase by 5% per year for the last two years of the project. Costs are expected to start at $35,000 and increase by 3% per year after that. What is the project's NPV? Equipment investment cost Installation cost capitalized) Marketing cost (one time) Sales revenues Operating costs Tax rate $80,000 $10,000 $5,000 $60,000 $35,000 30% .90 Company beta Risk free rate Return on the market Required return on debt Proportion of debt in target capital structure Proportion of equity in target capital structure Net Investment Capitalized Costs Time Zero Expenses Tax Effects Total Net Investment Straight Line Depreciation Base Years Annual Payment Sale of old assets Selling price Book Value Gain/Loss Tax Effect Terminal Value Terminal value Present Value of Year 2 Free Cash Flows Revenues - Operating Costs - Other Incremental Costs - Depreciation - EBIT -Taxes = EBIAT + Depreciation +/- Working Capital Free Cash Flows Discount Free Cash Flows with WACC Sum of Present Values of Free Cash Flows - Net Investment Net Present Value