Capital Buating Desisions INC 3310-OR MOHANTY Use Excel SpreadShest to compute Cash flows, NPV, IRR & Pay Back Pariod 8) Sales for first year (1) 5 200.000 1) Life Period of the Equipment 4 years 2) New equipment cost ) Sales inerease par year 10, operating cost 1 1 ) Depreciation (Straight Line)YR (200,000) 9 635,000) (120,000) 100,000 10% $ 3) Equipment ship & install cost 4) Related start up cost 5) inventory increase 6) Accounts Payable increase 25.000 s,000 12, Tax rate S 7) Equip. salvage value after tax 15,000 13) WACC ESTIMATING CASH FLOW and MAKING CAPITAL BUDGETING DECISION 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cost (1+2+3) AA 4t Working Capital Total Initial Outlay XXxxXxX Revenue Operating Cost Depreciation EBIT Taxes @ 35% Net Income Add back Depreciation Total Operating Cash Flow xxx XXxxxXxxxx xxx0x2 Terminal: 1) Change in net WC $ 20,000 $ 15,000 2) Salvage value (after tax)