1. Estimate the incremental cash flows for Sneaker 2013 project. Estimate the projects payback period, net present value, and internal rate of return. (Use excel template posted)
2. Estimate the incremental cash flows for Persistence project. Estimate the projects payback period, net present value, and internal rate of return. (Use excel template posted)

Sneaker 2013 Assumptions ($ millions) 0 1 2 3 4 5 6 2012 2017 2018 0.9 1.8 2013 1.2 115 $ 35 $ 2014 1.6 115 $ 15 $ 115 $ $ 55% 55% 55% $ $ $ 7 2015 1.4 115 $ $ 55% 7 $ 2 $ 10 $ 8% 25% 20% 2016 2.4 115 $ $ 55% 7 $ 3 $ 30 $ 8% 25% 20% 7 $ 2 $ 25 $ 8% 25% 20% 2 Sales (millions of pairs) Price/pair (net) Cannibalization (Erosion) Var Costs % of revenue) SG&A expenses Endorsement costs Other advertising and promotion Acc. Receivable (% of net revenue) Inventory (% of var costs) ACC. Payable (% of var costs) Factory expansion $ Equipment $ Freight and installation $ Inventory $ Acc. Payable $ Tax rate Factory market value (year 6) Equipment market value (year 6) 7 $ 2 $ 15 $ 8% 25% 20% 15 115 $ $ 55% 7 $ 2 $ 25 $ 8% 25% 20% 8% 25% 20% 150 15 5 15 5 40% 102 $ $ 3 Sneaker 2013 Assumptions ($ millions) 0 1 2 3 4 5 6 2012 2017 2018 0.9 1.8 2013 1.2 115 $ 35 $ 2014 1.6 115 $ 15 $ 115 $ $ 55% 55% 55% $ $ $ 7 2015 1.4 115 $ $ 55% 7 $ 2 $ 10 $ 8% 25% 20% 2016 2.4 115 $ $ 55% 7 $ 3 $ 30 $ 8% 25% 20% 7 $ 2 $ 25 $ 8% 25% 20% 2 Sales (millions of pairs) Price/pair (net) Cannibalization (Erosion) Var Costs % of revenue) SG&A expenses Endorsement costs Other advertising and promotion Acc. Receivable (% of net revenue) Inventory (% of var costs) ACC. Payable (% of var costs) Factory expansion $ Equipment $ Freight and installation $ Inventory $ Acc. Payable $ Tax rate Factory market value (year 6) Equipment market value (year 6) 7 $ 2 $ 15 $ 8% 25% 20% 15 115 $ $ 55% 7 $ 2 $ 25 $ 8% 25% 20% 8% 25% 20% 150 15 5 15 5 40% 102 $ $ 3