PACCAR Inc. Buy the rights to the technology Decision Performance Measures Dollars in Millions Assumptions Purchasing Technology Cost Purchasing New operating EQ $25.00 $150.00 New Tech. maintenance exp. (1) $5.00 O Growth in maintenance exp. for 3-6 3% 1 Salvage Value Tech (5) 2 Salvage Value operating EQ (5) 8 Increase in Revenue (1) $0.00 $0.00 $300.00 4 Growth Increase in Revenue for 2-3 5% 5 Growth Increase in Revenue for 4-5 3% 5 Operating Exp 7 Working Capital 1 3 expected tax rate requiered return 80.00% 6% 21% 5.5% 2 Cash Flows 3 Purchasing Technology Cost Purchasing New operating EQ 5 Increase in Revinues Increase in operating cost Increase in maintenance exp. B Increase in Tech Dpr. MACRS) Increase in New EQ. Dpr. (MACRS) O Change in Operating Profit Increases in taxes 2 Increase in After-Tax Oper. Profit 3 Increase in Tech Dpr. MACRS) Increase in New EQ. Dpr. (MACRS) 5 Change in Working Capital 5 After Tax Tech Salvage Value Tech 7 After Tax Tech Salvage Value EQ Time Year Year Year Year Year 0 1 2 3 4 5 $ 25.00 $ 150.00 $ 300.00 $315.00 $ 330.75 $340.67 $ 350.89 $ 240.00 $252.00 $264.60 $ 272.54 $ 280.71 $ 5.00 $ 5.15 $ 5.30 $ 5.46 $ 5.63 $ 8.25 $ 11.25 $ 3.75 $ 1.75 $ $ 15.00 $ $ - $ 27.00 $ 21.00 $ 18.00 $ 13.50 31.75 $ 19.60 $ 36.10 $ 42.92 $ 51.05 (6.67) $ (4.12) $ (7.58) $ (9.01) $ (10.72) $ 3.75 $ 1.75 $ $ 25.08 $ 15.48 $ $ 8.25 $ 11.25 $ 28.52 $ 15.00 $ 27.00 $ 21.00 33.91 $ 40.33 $18.00 $ 13.50 $ 18.00 $ 0.90 $ 0.95 $ 0.60 $ (20.44) 0 $11.66 3 Incremental After-Tax Cash Flows $ (175.00) $ 30.33 $ 52.83 $ 52.32 $ 53.06 $85.93 9 O Commulatice After-Tax Cash Inflows $ 30.33 $ 83.17 $ 135.49 $ 188.55 $274.47 1 Performance Measures BNPV (@WACC 5.5%) $51.52 IRR 14.75% 5 MIRR (@WACC 5.5%) 11.36% 5 Payback Years= 3.745 7