1) Life Period of the Equipment = 4 years 8) Sales for first year (1) $ 200,000 2) New equipment cost $ (200,000) 9) Sales increase per year 5% 3) Equipment ship & install cost $ (35,000) 10) Operating cost (60% of Sales) $ (120,000) 4) Related start up cost (5,000) (as a percent of sales in Year 1) -60% 5) Inventory increase 25,000 11) Depreciation (Straight Line)/YR $ (60,000) 6) Accounts Payable increase tA 5,000 12) Marginal Corporate Tax Rate (T) 219 7) Equip. salvage value before tax $ 15,000 13) Cost of Capital (Discount Rate) 10 ESTIMATING Initial Outlay (Cash Flow, CFo, T= 0) CFO CF1 CF2 CF3 CF4 Year 1 2 0 3 4 Investments: 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cost (1+2+3) 4) Net Working Capital Total Initial Outlay Operations: Revenue Operating Cost Depreciation