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Canon Inc is considering the C1-700 camera project with the following information: Duration of the project: 6 years. From Year Oto Year 5. Key estimates

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Canon Inc is considering the C1-700 camera project with the following information: Duration of the project: 6 years. From Year Oto Year 5. Key estimates for the project: Item Amount Time of occurrence R&D cost (sunk cost) $300 Prior to project start thousand Equipment Investment Cos $2.5 Year 0 million Pilot Testing Cost $100 Year o thousand Ramp-up Cost $1 million Year o Marketing and Support Cos $500 Year 1 to Year 5 thousand Unit Production Cost $400/cam Year 1 to Year 5 Inventory/Sales ratio 5% Year 1 Selling price $900/cam Year 1 Annual price growth rate 2%/year Year 2 to Year 5 Expected annual 4,000,000 Year 1 to Year 5 sales/production cameras/ year Maintenance Cost (pretax) $50,000 End of year 3 Corp income tax rate 21% Year Oto Year 5 Cost of capital (discount ra 5%/year Year Oto Year 5 Sales credit to customer 20% total Year 1 to Year 5 147 148 Operating Income 1 4 Sales Volume (also Production Volume 000) 149 150 Sales Price (5000) 151 Unit Production Cost (5000) 152 Revenues (5000) 153 OGS 5000 754 Rompe CASOOD 155 Destion/SUOD 156 Operating Income Before Tax/S000) 157 SNS000 Operating Income After Tax (5000) 162 We 163 Working Capital t 0 3 4 164 Revenues (5000) 165 Accounts Receivable (5000) 166 167 Inventory (5000) 168 Net Working Capital (5000) NeWo Kapital Change 15000 169 170 17/12 172 123 Complete the Net Cashflow table (unit thousand USD 15 points) Net Cashflow ($000 175 Operating Income After Tax (5000) 176 Add-back Depreciation (8000) 1771 Ne Working pith Diang SODO 178 Inventin Emerit 115000 179

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