I have started on this assignment but I am having trouble with the areas hilighted in GREEN. Please help and let me know if I have answered anything else incorrectly.

CAPITAL BUDGET EXAMPLE The production line produces a product which currently has annual sales of $1,000,000 and has a contribution to the business beyound ingredients of $500,000 Your line is currently operating at full standard capacity You are putting in new equipment which will make the line more efficient and last for 10 years The equipment will increase the capacity of the line by 30%. - so add capability to produce $300,000 more per year and will eliminate 3 positions of manual labor when fully operational the second year A manual position of labor costs $30000 per year with benefits A 6 month supply of ingredients is kept at all times It is expected that the learning curve will result in zero increased capacity in year 1 but the full 30% in year 2 The equipment will costs $600000 engineering and installation will cost $100000 Sales will grow at a rate so all production can be sold Advertising and promotion to get that growth will cost $50,000 per year The company has a WACC of 15% but uses a hurdle rate of 18% for projects of this risk type. OUTLINE THE CASH FLOWS IN THE CHART BELOW - please note some cash flows are positive and some are negative - you will need to make sure they sum appropriately EVALUATE THE INVESTMENT WITH PAYBACK, IRR and NPV Year CASH FLOW CALCULATIONS 0 1 2 3 4 5 6 7 8 9 10 Capacity of new line sales growth 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000 additional ingredients additional advertising -50,000 -50,000 -50,000 -50,000 -50,000 -50,000 -50,000 -50,000 -50,000 -50,000 savings from eliminating manual positions 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 90,000 increase in income before taxes 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Depreciation 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 Estimated taxes at 35% (14,000) (14,000) (14,000) (14,000) (14,000) (14,000) (14,000) (14,000) (14,000) (14,000 Increase in income after taxes + depc additional inventory cost of equipment ($600,000.00) cost of installation ($100,000.00) NET CASH FLOW ($700,000.00) 96,000 96,000 96,000 96,000 96,000 96,000 96,000 96,000 96,000 96,000 Payback 7.29 IRR 6.20% NPV ($268,567.72)