Years 0 1 2 3 4 5 Purchasing cost of the new fleet $2.00 Proceeds from selling the existing fleet $0.10 Capital gains tax adjusted $- (a) Net incremental CAPEX $1.90 Incremental Working Capital Incremental sales $1.70 $1.50 $1.30 $1.50 $1.70 Incremental variable expenses $(0.94) $(0.83) $(0.72) $(0.83) $(0.94) Incremental depreciation $(0.40) $(0.40) $(0.40) $(0.40) $(0.40) Incremental savings of replacement - operating expense $0.08 $0.08 $0.08 $0.08 $0.08 Incremental savings of replacement - Insurance $0.02 $0.02 $0.02 $0.02 $0.02 Incremental savings of replacement - Leasing cost $0.28 $0.28 $0.28 $0.28 $0.28 Incremental earnings before tax $0.74 $0.65 $0.56 $0.65 $0.74 Taxes $0.22 $0.20 $0.17 $0.20 $0.22 Incremental earnings after tax $0.52 $0.46 $0.39 $0.46 $0.52 Add back incremental depreciation $0.40 $0.40 $0.40 $0.40 $0.40 (b) Net incremental after tax operating cashflow Capital Gains (Salvage - Book value) on new fleet $0.40 Capital Gains (Salvage - Book value) on old fleet $0.10 Incremental capital gain $0.30 Tax on incremental capital gains $(0.09) Recouping net incremental working capital $0.21 (c) Terminal year after tax non operating cashflow $(1.90) $0.92 $0.86 $0.79 $0.86 $1.13 Net incremental cashflow