PART 2A: Do a similar analysis as in Part 1 to analyze a new scenario where the equipment is fully depreciated in the first year. All other inputs remain the same. Re-calculate NPV, IRR and Payback period of the project. HINT: negative EBIT creates a tax credit!
CF(0) = Cash Flow at Time 0			CF(0)	CF(1)	CF(2)	CF(3)	CF(4)
Year			0	1	2	3	4
Investments:
New equipment cost			$240,000
Net Working Capital needs at start			$20,000
Total Initial Outlay			$260,000	$-	$-	$-	$-
Operations:
Revenue				$200,000	$210,000	$220,500	$231,525
Operating Cost				$120,000	$126,000	$132,300	$138,915
Depreciation		ill just change it to 240000		$240,000
EBIT		Yes ok		$(160,000)	$84,000	$88,200	$92,610
Taxes				$(33,600)	$17,640	$18,522	$19,448
Net Income				$(126,400)	$66,360	$69,678	$73,162
Profit Margin (%)				-63.2%	31.6%	31.6%	31.6%
Add back Depreciation				$240,000	$-	$-	$-
Total Operating Cash Flow				$113,600	$66,360	$69,678	$73,162
Terminal Cash Flows (end of Year 4)
1) Change in net WC							$20,000
2) Salvage value (after tax) [= Salvage value before tax * (1-T)]							$11,850
Total							$31,850
Project Net Cash Flows			$(260,000)	$113,600	$66,360	$69,678	$73,162
NPV (New Scenario) =	$436		IRR =	10.1%		Payback
Answer the questions based on the answer above

PART 2B Questions: Scenario Analysis

Question 3:

Would you accept the project based on this scenario?

Question 4:

As the firm's CFO, explain the differences between the two depreciation alternatives and how they impact your NPV, IRR and Payback calculations.

Answer 3:

Answer 4:

All I need is for 3 & 4 questions to be answered based on the answers above