$ Initial equipment cost Equipment in 1 year Year 1 depreciation Year 2 depreciation Year 3 depreciation Year 4 depreciation Year 5 depreciation 55,000,000 30,000,000 3.750% 7.219% 6.677% 6.177% 5.713% Year 3 27,000,000 $ Year 4 35,000,000 $ Year 5 39,000,000 $ Year 6 43,000,000 $ $ Sales Variable cost Fixed cost NWC percentage of sales Terminal growth rate Tax rate Required return Year 2 18,000,000 $ 60% 3,500,000 8% 3% 21% 11.000% Year o Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Year O investment Year 1 investment Total depreciation This row reflects depreciation over the five years on the $55M outlay at time=0. This row reflects depreciation over the five years on the S30M outlay at time=1. Year o Year 1 Year 2 Year 3 Year 4 Year 5 Taken from row 16 60% of sales Taken from row 31 Revenue Variable costs Fixed costs Depreciation Tax Net income OCF New working capital: Beginning Ending NWC cash flow Note how F45 is obtained and proceed to the right to 145 Note how E46 is obtained and proceed to the right to 145 Note how E47 is obtained and proceed to the right to 146 Year 5 cash flow Value at end of year 5 of perpetual Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Taken from line 42 S (55,000,000) (30,000,000) Operating cash flow Capital spending Net working capital Terminal value Total cash flows Taken from line 47 Taken from D50 NPV Profitability index IRR $ Initial equipment cost Equipment in 1 year Year 1 depreciation Year 2 depreciation Year 3 depreciation Year 4 depreciation Year 5 depreciation 55,000,000 30,000,000 3.750% 7.219% 6.677% 6.177% 5.713% Year 3 27,000,000 $ Year 4 35,000,000 $ Year 5 39,000,000 $ Year 6 43,000,000 $ $ Sales Variable cost Fixed cost NWC percentage of sales Terminal growth rate Tax rate Required return Year 2 18,000,000 $ 60% 3,500,000 8% 3% 21% 11.000% Year o Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Year O investment Year 1 investment Total depreciation This row reflects depreciation over the five years on the $55M outlay at time=0. This row reflects depreciation over the five years on the S30M outlay at time=1. Year o Year 1 Year 2 Year 3 Year 4 Year 5 Taken from row 16 60% of sales Taken from row 31 Revenue Variable costs Fixed costs Depreciation Tax Net income OCF New working capital: Beginning Ending NWC cash flow Note how F45 is obtained and proceed to the right to 145 Note how E46 is obtained and proceed to the right to 145 Note how E47 is obtained and proceed to the right to 146 Year 5 cash flow Value at end of year 5 of perpetual Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Taken from line 42 S (55,000,000) (30,000,000) Operating cash flow Capital spending Net working capital Terminal value Total cash flows Taken from line 47 Taken from D50 NPV Profitability index IRR