inputs Equipment cost Net WC/Sales First year sales (in units Sales price per unit Variable cost per unit Nonvariable costs Depreciation and Amortization Schedule ear Equipment Depreciation Rate Equipment Depreciation Amount Ending Bk Value Net Salvage Values, in Year 4 Estimated Market Value in Year 4 Book Value in Year 4 Expected Gain or Loss Taxes paid or tax credit Net cash flow from salvage Projected Net Cash Flows Initial outflow Equipment operating Cash Flows Units sold Sales price Variable costs Sales revenue Variable costs Nonvariable operating costs Depreciation (equipment) Oper. income before taxes (EBIT) Taxes on operating income (40%) After-tax operating income Add back depreciation operating cash flow Required level of net working capital Required investment in NWC Terminal ear Cash Flow Net salvage value Net Cash Flows NPV RR RR $6,000 10.00% 500 $24.00 $17.50 $500 Initial Cost Market value of equipment at Year 4 $250 Tax rate 40.00% WACC 10.00% Inflation 3.00% Accum ears Dep. 20.0% 32.0% 19.0% 12.0% Egu ment $250.00 $20.00 $6,000 500 5501 600 6501 00 $24.72