A capital budgeting project is being considered for implementation. The asset is a 3-year MACRS class asset with a four-year project life. The cost of the asset, and the first year revenue and operating cost projections are provided in the table below:

Price of Asset	$280,000.00
Freight / Installation	$20,000.00
Depreciation Schedule:
Year 1	$99,000.00
Year 2	$135,000.00
Year 3	$45,000.00
Year 4	$21,000.00
Salvage Value	$30,000.00
Increase in NWC	$25,000.00
Revenues from project	$260,000.00
Operating Costs (excluding depreciation)	$115,000.00
Tax Rate	34%
Required Rate of Return	12%
Opportunity Cost - Sale of plant space	$100,000.00
Expected Annual Growth Project Revenue	4%
Expected Annual increase in operating cost	8%

Using Based on these projections, complete the Project Cash Flow Table below to calculate the relevant after tax cash flows, and then calculate the NPV and the IRR for the project. Show your numbers in thousands (200.00 for 200,000, etc). Read the problem carefully and consider all the data, especially the annual growth in revenue and operating costs.

Year	0	1	2	3	4
Total Revenues
Operating Costs (exc. dep)
Depreciation
Earnings before taxes
Taxes
Net income
Add back Depreciation
Net operating cash flows
Equipment Cost
Installation
Change in Net Working Capital
Opportunity Cost of Project
Salvage Value
Tax on Salvage Value
Return of NWC
NET CASH FLOWS	Q-1	Q-2	Q-3	Q-4	Q-5

Q- 6: I/YR = _________

Q 7: Net Present Value = $

Q 8: IRR =

Question 1

What is the total investment cash outflow value counted against the project (CF-0)?

Enter the value in thousands (e.g. $125,750 should be entered as 125.75), and enter cash outflows as negative values

Question 2

What is the incremental after-tax cash flow for year 1 (CF1)?

Enter the value in thousands (e.g. $125,750 should be entered as 125.75)

Question 3

What is the incremental after-tax cash flow for year 2 (CF2)?

enter the value in thousands (e.g. $125,750 should be entered as 125.75)

Question 4

What is the incremental after-tax cash flow for year 3 (CF3)?

Enter the value in thousands (e.g. $125,750 should be entered as 125.75)

Question 5

What is the incremental after-tax cash flow for year 4 (CF4), including after-tax salvage value of asset and return of NWC and opportunity cost?

Enter the value in thousands (e.g. $125,750 should be entered as 125.75)

Question 6

What is the discount rate (I/YR) for this project?

Enter the discount rate as a whole percentage number, not in decimal form (i.e. 5% should be entered as 5 or 5.0 and NOT as 0.05).

Question 7

Based on the project's discount rate and incremental cash flows, what is the NPV of the project?

Enter the value in thousands (e.g. $125,750 should be entered as 125.75)

Question 8

Given the cost and incremental cash flows of the project, what is the project's IRR?

Enter the IRR value as a percentage, not in decimal form (e.g. 11.5% should be entered as 11.5 and NOT as 0.115)