Bridgette and Lisa just completed the development of a better face shield for health workers. The new product is expected to produce annual revenues of $200,000.00 Bridgette and Lisa require an investment in an advanced 3D Printer costing $200,000.00 The project has an expected life of 5 years based upon the development and dissemination of a vaccine for coronavirus. The 3D printer will have $100.00 salvage value as the market for 3D printers will be flooded as demand plummets for face shields. In order to produce the face shields Bridgette and Lisa must maintain a large inventory of plastic pellets. Therefore, working capital is expected to increase by $200,000.00 However, Bridgette and Lisa will not recover any of working capital at the end of the products life cycle. Annual operating expenses are estimated at $101,000.00 The required rate of return is 8%

Calculate the Net Present Value

Prepare a schedule of projected annual cash flows

CASHFLOW WORKSHEET

Year Zero (Add Two Cash Outflows )

1. Buy Equipment

2. Increase Working Capital Investment (buy inventory)

Year One Revenue -Expense

Year Two Revenue -Expense

Year Three Revenue -Expense

Year Four Revenue - Expense

Year Five (Add together three distinct Cash inflows)

1. Year Five Revenue- Expense

2. +Salvage value from selling equipment

3. +Recover Working Capital Investment (sell off remaining inventory) +