1.calculate and show work to find The Net Present Value of the after-tax cash flows. 2.Using the net present value you calculated above, explain in laymans (practical) terms what the net present value means in terms of value to the company.

3.In this case, would the IRR be higher or lower than the MARR. Explain. (You dont have to calculate the IRR). 4. Calculate the Payback period of this incremental project and explain if the firm has a policy of not accepting a project with a payback period of greater than 5 years, would this decision be consistent with the net present value calculation that you calculated above. Explain.

Incremental income statement year 0 1 2 3 4. 5 7 8 9 10 revenue 2% 1,600,000 1,632,000 1,664,640 1,697,933 1,731,891 1,766,529 1,801,860 1,837,897 1,874,655 1,912,148 5% 5% 5% expenses fuel cost maintence electricity interest expense CCA furnace CCA Computer taxable income Less: Taxes 200,000 10,000 22,000 13,500 630,000 41,250 683,250 191,310 210,000 10,500 23,100 12,322 1,011,000 59,813 305,265 85,474 220,500 11,025 24,255 11,109 707,700 26,916 663,135 185,678 231,525 11,576 25,468 9,860 495,390 12,112 912,002 255,361 243,101 12,155 26,741 8,573 346,773 5,450 1,089,098 304,947 255,256 12,763 28,078 7,248 242,741 2,453 1,217,990 341,037 268,019 13,401 29,482 5,883 169,919 1,104 1,314,052 367,934 281,420 14,071 30,956 4,477 118,943 497 1,387,533 388,509 295,491 14,775 32,504 3,028 83,260 224 1,445,373 404,705 310,266 15,513 34,129 1,537 58,282 101 1,492,320 417,850 Net Income 491,940 219,791 477,457 656,641 784,151 876,953 946,117 999,024 1,040,669 1,074,470 Cash Flow Statement 491,940 671,250 219,791 1,070,813 477,457 734,616 656,641 507,502 784,151 352,223 876,953 245,194 946,117 171,023 999,024 119,440 1,040,669 83,484 1,074,470 58,383 (4,350,000.00) Net income CCA investment activites investment salvage Disposal tax effect ITC Working Capital Principal Repayment 50,000 24,101 200,000 no inflation (300,000) 450,000 200,000 (51,217) (39,254) (40,431) (41,644) (42,894) (44,180) (45,506) (46,871) (48,277) (49,725) Net Cash Flow (4,200,000.00) 1,323,936 1,250,173 1,170,429 1,121,249 1,092,194 1,076,641 1,070,269 1,070,187 1,074,428 1,355,737 Incremental income statement year 0 1 2 3 4. 5 7 8 9 10 revenue 2% 1,600,000 1,632,000 1,664,640 1,697,933 1,731,891 1,766,529 1,801,860 1,837,897 1,874,655 1,912,148 5% 5% 5% expenses fuel cost maintence electricity interest expense CCA furnace CCA Computer taxable income Less: Taxes 200,000 10,000 22,000 13,500 630,000 41,250 683,250 191,310 210,000 10,500 23,100 12,322 1,011,000 59,813 305,265 85,474 220,500 11,025 24,255 11,109 707,700 26,916 663,135 185,678 231,525 11,576 25,468 9,860 495,390 12,112 912,002 255,361 243,101 12,155 26,741 8,573 346,773 5,450 1,089,098 304,947 255,256 12,763 28,078 7,248 242,741 2,453 1,217,990 341,037 268,019 13,401 29,482 5,883 169,919 1,104 1,314,052 367,934 281,420 14,071 30,956 4,477 118,943 497 1,387,533 388,509 295,491 14,775 32,504 3,028 83,260 224 1,445,373 404,705 310,266 15,513 34,129 1,537 58,282 101 1,492,320 417,850 Net Income 491,940 219,791 477,457 656,641 784,151 876,953 946,117 999,024 1,040,669 1,074,470 Cash Flow Statement 491,940 671,250 219,791 1,070,813 477,457 734,616 656,641 507,502 784,151 352,223 876,953 245,194 946,117 171,023 999,024 119,440 1,040,669 83,484 1,074,470 58,383 (4,350,000.00) Net income CCA investment activites investment salvage Disposal tax effect ITC Working Capital Principal Repayment 50,000 24,101 200,000 no inflation (300,000) 450,000 200,000 (51,217) (39,254) (40,431) (41,644) (42,894) (44,180) (45,506) (46,871) (48,277) (49,725) Net Cash Flow (4,200,000.00) 1,323,936 1,250,173 1,170,429 1,121,249 1,092,194 1,076,641 1,070,269 1,070,187 1,074,428 1,355,737