Capital Budgeting Example Over 6 Years Equipment = $100,000 (USE 7-MACRS) Salvage Value =$20,000 Pixed costs of $90,000 $4 per bucket Sales 40,000 in year 1 plus 1,500 more each year Variable costs are 156 of Revenues NHC outlay of $10,000 and 88 after that Tax - 154 Rate of Return 365 Projected Revenues Cost of Backets and Balls Depreciation of Equipment Projected Income Statements Projected Income Statements Additions to Net Working Capital Operating Cards Flow Cash Flow From Assets Present Value of Cash Flows Present Value of Cash Flows NPV for Project Capital Budgeting Example Over 6 Years Equipment = $100,000 (USE 7-MACRS) Salvage Value =$20,000 Pixed costs of $90,000 $4 per bucket Sales 40,000 in year 1 plus 1,500 more each year Variable costs are 156 of Revenues NHC outlay of $10,000 and 88 after that Tax - 154 Rate of Return 365 Projected Revenues Cost of Backets and Balls Depreciation of Equipment Projected Income Statements Projected Income Statements Additions to Net Working Capital Operating Cards Flow Cash Flow From Assets Present Value of Cash Flows Present Value of Cash Flows NPV for Project