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o Year 1 Year 2 Year 3 Revenues Year 0 500000 500000 500000 - Cost of Goods Sold - 160000 - 160000 160000 -Depreciation -

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o Year 1 Year 2 Year 3 Revenues Year 0 500000 500000 500000 - Cost of Goods Sold - 160000 - 160000 160000 -Depreciation - 100,000 - 100,000 - 100.000 EBIT 240000 240000 240000 - Taxes (20%) - 48000 - 48000 - 48000 Unlevered net income 192000 192000 192000 Depreciation 100.000 100,000 100,000 - Additions to Net Working Capital - 20,000 - 20,000 - 20.000 - Capital Expenditures - 300,000 =Free Cash Flow 272000 272000 272000 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project . The depreciation schedule shown is for three-year, straight-line depreciation. By how much would the net present value (NPV) of this project be increased, if the cars were depreciated by the MACRS schedule shown below given that the cost of capital is 10%? Year 0 Year 1 Year 2 Year 3 MACRS 33,33% 44.45% 14.81% 7.41% Depreciation Rate

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