use the excel file below

0 NWC at year 5 = 0 becaL unit growth 0% Blue numbers indicate the assumptions price per unit 12% cost of sales per unit 7% Selling, General & Admin. expense 20,000 incremental overhead initial investment 200,000 salvage value useful life 5 Annual Depreciation 40,000 Assume straightline depreciation tax rate 30% discount rate 15.0% Year 0 1 2 3 4 5 units 10,000 10,000 10,000 10,000 10,000 Sales 1,200 1,200 1,200 1,200 1,200 Cost of sales 700 700 700 700 700 Gross Prot 500 500 500 500 500 Selling, General & Admin. 20,000 20,000 20,000 20,000 20,000 Depreciation 40,000 40,000 40,000 40,000 40,000 EBIT (59,500) (59,500) (59,500) (59,500) (59,500) Income Tax (17,850) (17,850) (17,850) (17,850) (17,850) Unlevered Net Income [41,650] [41,650] [41,650] [41,650] [41,650] Add Back Depreciation 40,000 40,000 40,000 40,000 40,000 Subtract Change in NWC (10,000) (5,000) (2,000) 2,000 5,000 10,000 Subtract Capital Expenditure (200,000) Free Cash Flow [210,000] [6,650] [3,650] 350 3,350 8,350 Discount Factor 0.869565217 0.7561437 0.6575162 0.5717532 0.4971767 FCF Present Value (210,000) (5,783) (2,760) 230 1,915 4,151 NPV [212,246] >0, so accept the project Year 0 1 2 3 4 5 Level of NWC 10,000 15,000 17,000 15,000 10,000 Change in NWC 10,000 5,000 2,000 (2,000) (5,000) [10,000] Cash Flow Impact of ch (10,000) (5,000) (2,000) 2,000 5,000 10,000 0 [netting acr: 0 [netting acr