Discount rate A B C D 0.0% F G H | E Blue cells can be modified Purchase of equipment Investment in working capital Overhaul of equipment Salvage value of the equipment Working capital released Sales Variable expenses Now 1 2 3 4 5 eses $ (420,000) $ (80,000) $ (50,000) $ 30,000 $ 80,000 $ 850,000 $ 850,000 $ $ (500,000) $ (500,000) $ (500,000) $ Fixed out-of-pocket operating costs $ (200,000) $ (200,000) $ (200,000) $ 850,000 $ 850,000 $ 850,000 (500,000) $ (500,000) (200,000) $ (200,000) Total cash flows (a) $ (500,000) $ 150,000 $ 150,000 $ Discount factor (b) 1.000 1.000 Present value of cash flows (a) (b) $ (500,000) $ 150,000 $ 1.000 150,000 $ 100,000 $ 1.000 100,000 $ 150,000 $ 1.000 150,000 $ 260,000 1.000 260,000 Net present value (SUM B16:G16) $ 310,000