Investment 1. Sales 2. Variable costs 3. Fixed costs 4. Depreciation 5. Pre-tax profit (1-2-3-4) Year 0 Years 1-12 - $5,400,000 $ 16,000,000 13,000,000 2,000,000 450,000 550,000 6. Taxes (at 40%) 220,000 7. Profit after tax I 330,000 8. Cash flow from operations (4+7) 780,000 Net cash flow -$5,400,000 780,000 Recalculate cash flow as shown from above table if variable costs are 83 percent of sales. Confirm that NPV will be $788,000 with a cost of capital of 8% and the annuity 12 years factor is 7.536