1 2 3 4 5 CF -75,000 30,000 30,000 30,000 30,000 40.000 ASSUME THE FOLLOWING ITEMS WERE OVERLOOKED WHEN COMPUTING CASH FLOWS ABOVE: 1. Working capital requirements with and without the following are as follows: Year Working cap. Working cap w/o proiect with preis 1. $10,000 S15000 2 $10,000 316000 3 $10,000 SIN000 4 | 09100 S18000 5 $10000 SI8000 b. A machine the company owns can be used for the project. If it was sold to another firm, the company could receive 520,000. The book value of the machine is 58.000, c. If the company didn't take the project, it would need to expand the plant five years from now. But with the project, capacity would need to be expanded today. The cost of the expansion today is $100,000 and in five years is $120.000. The project will cannibalize $5,000 (after-tax) per year from existing 1. The firm is in a 40% tax bracket. The Cost of Capital is 10%. business units SHOW YOUR WORK HERE (or the other side of this page) REVISED CASH FLOW ESTIMATES BELOW: Period Unrevised CF NWC 0 -75,000 1 30.000 2 30,000 3 30.000 4 30,000 5 40.000 Old Machine R&D Expansion Cannibalization Total