A firm is considering buying a machine for $7M. They expect it to last 3 years w/700k salvage value at the end of year 3. The machine will generate an estimated $5M in revenue in year 1 with growth of 20% per year. Fixed costs are $900k/yr. COGS are 30% of sales. NWC requirements are $300k, $360k, and $320k in years 1-3. Corporate tax rate is 20% and investors require a 12% return.

1. Create a Capital Budget estimating CFFA in Years 0-3

2. Find NPV and IRR