Estimate Cash flows of the three-year project by filling in the values in the table below. Equipment will cost $40,000, Shipping and installation charges for the equipment are expected to total $5,000. The Machine is depreciated using straight line method to a value of $0 at the end of it's life. Net working capital is $10,000 initially and $5,000 in year 1. All investment in net working capital is recovered back at the end of the project Total revenues will be $50,000 in year 1, $60,000 in year 2 and $75,000 in year 3. Operating costs = $25,000 during the first year and increase at a rate of 6 percent per year over the 3-year project Marginal tax rate is 40 percent. Cost of capital = 10%

Year	0	1	2	3
Revenue
-Operating Cost
- Depreciation
Operating Earnings Before Taxes
- Taxes (40%)
Operating Earnings After taxes
+ Depreciation
- Change in Net working Capital
- Initial Investment in Machinery
Net Cash Flows