Calculate the free cash flow without the new product
Timeline	0	1	2	3
Without project	2010	2011	2012	2013
Sales	$100.00	$100.00	$100.00	$100.00
COGS	50.00	50.00	50.00	50.00
Gross Margin	50.00	50.00	50.00	50.00
Operating expense	10.00	10.00	10.00	10.00
Depreciation	10.00	10.00	10.00	10.00
EBIT	30.00	30.00	30.00	30.00
Interest Expense	0.00	0.00	0.00	0.00
EBT	30.00	30.00	30.00	30.00
Taxes	9.00	9.00	9.00	9.00
Net Income	21.00	21.00	21.00	21.00
Other information
Inventory	10.00	10.00	10.00	10.00
Capital expenditure	0.00	0.00	0.00	0.00
Debt	0.00	0.00	0.00	0.00

Calculate the free cash flow with the new product
Timeline	0	1	2	3
With project	2010	2011	2012	2013
Sales	$100.00	$110.00	$121.00	$133.10
COGS	50.00	55.00	60.50	66.55
Gross Margin	50.00	55.00	60.50	66.55
Operating expense	10.00	11.00	12.10	13.31
Depreciation	10.00	30.00	30.00	30.00
	30.00	14.00	18.40	23.24
Interest Expense	0.00	3.00	2.50	2.00
EBT	30.00	11.00	15.90	21.24
Taxes	9.00	3.30	4.77	6.37
Net Income	21.00	7.70	11.13	14.87
Other information
Inventory	10.00	11.00	12.10	13.31
Capital expenditure	60.00	0.00	0.00	0.00
Debt	60.00	50.00	40.00	30.00

Calculate FCF with and without the new project given the following accounting information
Calculate the NPV
Discount rate is 10%
Following 2013 FCF will grow by 5%
Calculate the NPV including the terminal value
The tax rate is 30%