BUDA 2 3 CAPEX CAPEX 201 1 2012 2013 2014 Salvage Value* Add'l NWC Add'l NWO Annual Sales revenue Increases Fixed Costs Sales Units Tot . Variable cost Price per unit Depreciation VC per unit Operating profit Fixed Costs Tax NOPAT MACRS 3 - yr Depreciation Free Cash Flow 45 90 Salvage value , after - tax! 90 5} NWC recovery 90 L Total Cash Flows* PVIF Tax rate PV Cash Flows Sum Outflows WACO Gum PV Cash Flows NPV NPV Margin Y's I Sales revenue