CRAMD has the following revenue and lost estimates for the next two years:

sales = 4 million units/year for (two years)

-per unit price=$22, per unit cost= $16 up front

R&D= 8 million Up front New Equipment= 20 million expected life of the new equipment is 2 years. Annual overhead= 1.6 million (for 2 years). Assume there is no need to make an investment in working capital and that this projext ia one project among many projects that CRAMD is undertaking and that CRAMD regularly makes large profita each year. Tax rate: marginal rate of 40%

use that above infor to create an income statment that shows net income for current year and next two years. Calculate your free cashflow for for 2 years 0-2. calculate the NPV of this potential investment if appropriate cost of capital is 12%. Depricciate the equipment equally over the equipments life span.

free cash flow for year 0?

a. 7.44 million

b 15.65 mil

c 4.67 mil

d. 4.8 mil

e. 24.8 mil

f. 12.88 mil

g 2.89 mil

h3.25 mil

i. 17.44 mil

j -20 mil