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1. &J inc. are considering purchasing the assets of a robotics company in bankruptcy. The previous owners of Tin Can Robotics Ltd invested $550,000 in

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1. \&J inc. are considering purchasing the assets of a robotics company in bankruptcy. The previous owners of Tin Can Robotics Ltd invested $550,000 in a revolutionary waste management system and were on the point of launching the service, but ran out of money. The brothers believe the technology will work and the Knots would pay $300,000 to purchase the system for their company. The equipment can be put into use immediately and it is expected to generate revenues of $500,000 annually for the initial five years, increasing to $525,000 per year for the final five years. Cash expenses will be $360,000 per year for ten years. Working capital of $75,000 will have to be injected at the start of operations to support sales. If the project proceeds, an overhaul of the equipment will be required at the end of year 6 at a cost of $200,000 (cost to be capitalized). Ten years from now, the equipment can be salvaged for $80,000. cCA Rate: 30%. Tax Rate: 39%. WACC: 10%, Given the above information: 1. Total cash flow in year 0 is: 2. PV for overhaut is 3. The PV for revenue from year 1 to year 5 is 4. The PV for revenue from year 6 to year 10 is: 5. The PV for expenses from year 1 to year 10 is: 6. PV for salvage is

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