1. Given the chart below what is the amount of the Year 0 Total Cash Flow?

A B D E F. 1 Part 1: Base Case: 2 New system cost 3200000 3 Salvage value 200000 4 Old system market value 506239 5 New system actual SV 600000 6 Depreciation 600000 =(3200000-200000)/5 7 Book Value 800000] =3200000-(600000*4) 8 After-tax salvage value 642000=600000-21%*(600000-800000) 9 Year 1 Sales 3000000 10 Growth Year2-3 4.50% 11 Growth Year 4 -10% 12 Expense 74% of Sales 13 Tax rate 21% 14 Required rate 8.50% 15 Net working capital 200000 16 recovered at end 40% 17 Year 0 1 2 3 4 18 Initial Cost -3000071 19 20 Sales 3000000.00 3135000.00 3276075.00 2948467.50 21 Less : Variable cost -2220000.00-2319900.00 -2424295.50 -2181865.95 22 Less : Depreciation -600000.00 -600000.00 -600000.00 -600000.00 23 EBIT 180000.00 215100.00 251779.50 166601.55 24 Less : tax@21% -37800.00 -45171.00 -52873.70 -34986.33 25 Net earnings 142200.00 169929.00 198905.81 131615.22 26 Add : Depreciation 600000.00 600000.00 600000.00 600000.00 27 Add: Net working capital 80000.00 28 Add : Salvage value 642000.00 29 Operating cash flow -3000071 742200.00 769929.00 798905.81 1453615.22 30 Present value factor@8.5% 1.0000 0.9217 0.8495 0.7829 0.7216 31 Present value -3000071 684055.30 654020.26 625469.82 1048891.37 32 NPV 12365.56 33 IRR 8.67% w