All of the estimations for the capital allocations and acquisition along with the financial feasibility will be based on the project assumptions and limitations as follows: Due to the new technology investment, sales are expected to increase on an incremental basis of $10,000 increase every year for the next 4 years. All of the overhead costs (except for the new equipment cost) are estimated on an incremental basis of $1,500 increase every year for the next 4 years. Corporate tax bracket applied to DelRay is set at 40.00%. Deprecation of the new PMS technology is estimated on a straight-line method, which is set at $1,000 for the next 4 years. Estimated cash flows (CFs) are measured on an after-tax basis. Cost of the new asset and the underlying overhead costs will be carried over to year 1 as shown in the 4-year financial projections and after-tax pro-forma CF structure. All project milestones are performed in accordance with the project completion schedule and there are no delays in project tasks. All transactions are closed on annual basis with no carry-over to subsequent years. The cost of capital estimation requires the cost of permanent sources of both short and long-term capital as explained later in the write-up. Cost of capital for this project is measured by the Weighted Average Cost of Capital (WACC).

Calculate the stream of CFs for this upgrade project.

Required information:

-Due to new technology investment, sales are expected to increase on an incremental basis of $10,000 increase every year for the next 4 years.

-All overhead costs (except for the new equipment cost) are estimated on an incremental basis of $1,500 increase every year for the next 4 years.

-Tax rate = 40.00%

-Depreciation of the new technology is estimated on a straight-line method, which is set at $1,000 for the next 4 years.

-Estimated cash flows (CFs) are measured on an after-tax basis.

Estimation of the Flow of Funds (Stream of Expected After-Tax CFs) 4-year Financial Projections and After-tax Pro-Forma CF Structure Sales Projections \begin{tabular}{|c|c|c|c|} \hline \multicolumn{1}{c}{ Year 1} & Year 2 & Year 3 & Year 4 \\ \hline & & & \\ \hline \end{tabular} Overhead Costs: Additional Staffing and Dellivery Cost Shipping, Installation, and Insurance Cost Maintenance Cost Design, Build, and Implementation of the New Technology