Premium Company is considering the introduction of a new product that requires to purchase of a new industrial oven. The industrial size oven will cost $960,000 and will be used for 5 years.

The company is in the 25% marginal tax bracket and has a required rate of return of 11%.   A once-off additional working capital requirement of $35,000 is needed that will be liquidated at the end of year 5.

The accountant has forecasted that this oven would be able to generate the following operating cash flows over 5 years:

YEARS	1	2	3	4	5
Operating cash flows	$   325,000	$   276,250	$   325,000	$   247,000	$   178,750

Complete the following template and write down the NET CASH FLOWS for each year.

CASH FLOW BUDGETING
SECTION 1. Determine the investment required to launch a new project
Year	0	1	2	3	4	5
Net capital investment required
TOTAL INVESTMENT REQUIRED
SECTION I. Calculate the change in EBIT, Taxes and Deprecation
Year	0	1	2	3	4	5
OPERATING CASH FLOWS
SECTION III. Calculate Net Working Capital
	0	1	2	3	4	5
Change in Working Capital:
SECTION II - NET CASH FLOW PER YEAR
TOTAL INVESTMENT REQUIRED
OPERATING CASH FLOWS
NET CASH FLOW
PAYBACK:
Rate of discount (WACC):
NPV
IRR