Banana Corporation (BANA) operates helicopter tours and it is considering whether to buy a new helicopter to operate tours to view Sydney from above. The new helicopter has a purchase price of $300,000. The CEO suggests the helicopter purchase price should be split equally during the projects life.

Only if the new helicopter is purchased, BANA will sell an old rotor which they have and which is not compatible with the new helicopter. This rotor has been fully depreciated for tax purposes and has a current value of $35,000.

The new helicopter has a useful life of ten years. The new helicopter is equipped with new controls and safety features. In order to be able to operate the new helicopter, the two helicopter tour pilots which work for BANA immediately need to undertake a six-hour training class. The training costs are tax deductible, and will cost $2,000 per pilot.

The company plans to issue $100,000 worth of equity in a private placement to help fund the new helicopter today. The new helicopter tour will result in a decrease in accounts receivable for the company from $17,000 to $15,000. The company anticipates that inventory will increase by $10,000 to $30,000.

Last month BANA paid McKinsey Consultants $7,000 to assess demand for helicopter tours over Sydney. To accommodate the new helicopter, BANA will need to build a hangar to park and maintain the helicopter. The hangar will cost $150,000 and can be depreciated on a straight-line basis over 20 years.

Assume the company tax rate is 30%.

What are the 'cash flows at the start'?

What are the 'cash flows over the life'?

What are the 'cash flows at the end'?