Alfa Inc is in the 30 percent marginal tax bracket and has required return on all its projects of 15 percent. Based on these preliminary project estimates,

1. Calculate the cash flows from the project in the table below. (6)
2. What is the NPV of the project? (2)

(Round off the figures to nearest integer. Decimal figures not required)

MACR 7-year depreciation percentage

Year	1	2	3	4	5	6	7	8
Depreciation (%)	14.29%	24.49	17.49	12.49	8.93	8.92	8.93	4.46

Copy the following format on your notebook and solve. Structure is available. You have to plug in figures with the correct signand calculate project cash flows.

Excel submission is not allowed.

	0	1	2	3	4	5
Sales (No. of units)		10	8	11	12	9
SP per unit
VC per unit
Sales Revenue
Working capital
Depreciation
Sales
Variable Cost
Fixed Cost
Depreciation
EBIT
Taxes (@ )
NOPAT
Adjustments
Equipment Cost
Depreciation
Working Capital Changes
After tax Salvage
Total Cash Flows

(Hint: Coefficient of Variation = SD/Expected Return and

Expected Cash flows can be taken as same for all three years for NPV calculation)