12. In order to begin immediate production of Persistence, the design technology and the manufacturing specifications for a new hiking shoe would be purchased from an outside source for $50 million. This outlay was to take place immediately and be expensed immediately for tax purposes.

Only focus on the arrow please. I have everything else done. Does $-50 really belong in 2013, or does it belong in 2012 (Y0) since this purchase takes place immediately? It seems to be considered an outlay, too.

0 2012 1 2013 2 2014 3 2015 Year HIKING BOOT ($ mins) Hiking Market Market Share Revenue (Market share x market size) Lost sales (Cannibalization) Net Revenue Variable Cost (38% Revenue) SG&A (Yr 1 12%, Yr 2 10%, Yr 8% Revenue) Endorsement Endorsement Bonus Other advertising Depreciation - factory Depreciation - equipment Technology purchase Interest Costs* Operating Profit (EBIT) Tax Impact (40%) Operating Profit After Tax Plus Depreciation - factory Plus Depreciation - equipment Net Change in Working Capital $ New Factory (Outlay/Salvage) $ New Equipment (Outlay / Salvage) $ Project Cash Flows $ 350 $ 402.5 $ 462.9 15% 18% 20% $ 52.50 $ 72.45 $ 92.58 $ - $ - $ . $ 52.50 $ 72.45 $ 92.58 $ (19.95) $ (27.53) $ (35.18) $ (6.30) $ (7.25) $ (7.41) $ - $ - $ $ - $ - $ - $ (3) $ (2) $ (2) $ - $ - $ - $ (1.60) $ (2.56) $ (1.52) $ (50) $ - $ . $ (0.6) $ (0.6) $ (0.6) $ (28.95) $ 32.51 $ 45.87 $ (11.58) $ 13.01 $ 18.35 $ (17.37) $ 19.51 $ 27.52 $ - $ - $ .. $ 1.60 $ 2.56 $ 1.52 (15) $ - $ - $ 15 - $ - $ - $ - (8) $ 2.32 -23 -15.77 22.0684 46.3623