1. As a new CFO of a company you need to prepare indirect method of cashflow statement from your income statement from year 1 to 4. The sales for every year is assumed to be BD 30,000, cost of goods sold is BD 10500. The are several expenses given; (5 marks)

1) Selling, general and administrative is BD 3500 for every year

2) Research and development is BD 16200 at year 0.

3) Depreciation is BD 2000 for every year.

4) Income tax is 40%

5) Capital expenditure is BD 6800 in year 0

6) Decreases in net working capital is 1200 in year 1.

The company uses a discount rate of 12%. Calculate the net present value (NPV)

Year	0	1	2	3	4
Incremental Earnings Forecast
Sales
Cost of Goods Sold
Gross Profit
Selling general and administrative
Research and development
Depreciation
EBIT
Income tax (40%)
Unlevered net income
Free Cash Flows
Plus:Depreciation
Less:Capital Expenditures
Less:Decreases in Net working capital
Free Cash Flows
PVIFA
Total present value
Net present value