Year 0 Units lnc Sales Less: lnc VC Less: FC Less: Dep. EBIT Less: Taxes Net Income Plus: Depreciation Operating Cash Flow LESS: Investment in Operating Capital Change in FA Change in NWC Free Cash Flow $ (165,000) $ (80,000) $ (245,000) Year 1 1,000 $ 400,000 $ (225,000) $ (100,000) (55,000) 20,000 (6,800) 13,200 55,000 $ 68200 (20,000) $ 48200 Year 2 1,250 $ 500,000 $ (281,250) (55,000) 63, 750 (21,675) 42,075 55,000 97,075 (6,000) 91,075 Year 3 1,325 $ 530,000 $ (298,125) $ ( 100,000) (55,000) 76,875 (26,138) 50,738 55,000 $ 105,738 23, 100 $ 106,000 $ 234,838