1) Life Period of the Equipment = 4 years 2) New equipment cost 3) Equipment ship & Install cost 4) Related start up cost 5) Inventory increase 6) Accounts Payable Increase 7) Equip. Salvage Value Estimated End of Year 4 (fully depreciated) 8) Sales for first year (1) $ 200,000 $ (200,000) 9) Sales Increase per year 5% $ (35,000) 10) Operating cost: $ (120,000) $ (5,000) (60 Percent of Sales) -60% $ 25,000 11) Depreciation (Straight Line)/YR $ (60,000) $ 5,000 12) Tax rate 35% $ 15,000 13) Cost of Capital (WACC) 10% ESTIMATING Initial Outlay (Cash Flow, CFO, T=0) YEAR CF3 CFO o CF1 1 CF2 2 CF4 4 Investments: 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cost (1+2+3) 4) Net Working Capital Inventory Inc.-Acct. Payable Inc. S (20.000) 5 GA $ $ $ Total Initial Outlay Operations: Revenue Operating Cost Depreciation EBIT Taxes Net Income (LOSS) TAX SHIELD DUE TO LOSS Add back Depreciation Total Operating Cash Flow XXXXXX XXXXX XXXXX XXXXX XXXXX XXXXX $ CA $ $ Terminal (END of 4th YEAR) 1) Release of Working Capital 2) Salvage value (after tax) Total 20.000 XXXXXX