A firm is looking at an expansion project will entail an equipment purchase of $110,000 along with another $10,000 in installation costs. MACRS 3 year. Increased net sales (net of expenses except for depreciation which is EBITDA) are 40,000 year 1, 70,000 year 2 and 40,000 year 3.

The equipment can be sold at the end of the 3 years for $20,000. Tax 30%. WACC 8%

1. What is the initial investment (CF0)?
2. What are the year 1-3 OCFs (operating cash flows)?
3. What is the terminal value?
4. What is the NPV (net present value)?
5. What is the IRR (internal rate of return)?
6. What is the payback?
7. What is the discounted payback?