Equipment Book Value* 4 , 500 , 000 3, 000 , 150 959, 900 3:33 , 450 Dept MACRS 33. 33% 44. 45% 14 .81% 7.41 % 0. 00% Annual Depreciation 1 , 499, 850 2,000 , 250 666, 450 3:33, 450 Unit Price* 25 Unit Sales 150, 000 Year 1 2 3 4 5 Income Statement Revenue 3 , 750, 000 VO 500,000 FC 600, 000 Depreciation 1 , 499, 850 EBIT 1 , 050 , 150 Taxes ( 35%/6 ) 367 , 553\ Net Income* 682, 598 Operating Cash Flow EBIT 1 , 050 , 150 Depreciation ( Add ) 1 , 499, 850 Taxes ( 367 , 55.3) Operating Cash Flow 2 , 182 , 448 Net Working Capital NWC Requirement Total Change in NWC Capital Spending Initial Outlay* Aftertax Salvage Capital Spending Operating Cash Flow 2 , 182 , 448 Change in NWC Capital Spending* Total Project Cash Flow 2 , 182, 448 Cumulative Cash Flow 2 , 182 , 448 2 , 182 , 448 2 , 182 , 448 2 , 182 , 448 2 ,182 , 448 Discounted CF @ 12% 1 , 948, 614 Discount rate 12% Payback NPL IRR