Proceed with these steps:

step one: read the Case Study

step two: make notes and and proceed with calculations in Excel spreadsheet (upgraded!) (calculate missed numbers, highlighted in yellow)

step three: construct NPV profiles for projects

Year 2 Year 3 Year 4 1 Exhibit TN1 2 Hightrek Inc. 3 Free-Cash-Flow Analysis 4 5 Project Assumptions 6 Discount 10% 7 Investment 80 000 8 Cash variable cost % of revenue) 65% 9 Cash fixed cost 38 000 10 Tax rate 30% 11 Net working capital (NWC) to revenue 6% 12 13 Free-Cash-Flow Approach 14 Year 1 15 16 Revenues 170 000 17 Cash variable expenses 110 500 18 Cash fixed expenses 38 000 19 Depreciation 20 000 20 1 500 21 Allowance for taxes 450 22 Net operating profit after tax (NOPAT) 1 050 23 Plus depreciation 24 Less capital expenditure (Capex) 80 000 25 Less the change in NWC 26 Recovery of NWC 27 -80 000 1 050 28 29 NWC schedule 0 10 200 30 31 Net present value (NPV) 32 Internal rate of return (IRR) 33 34 35 36 220 000 250 000 143 000 162 500 38 000 38 000 20 000 20 000 19 000 29 500 5 700 8 850 13 300 20 650 270 000 175 500 38 000 20 000 36 500 10 950 25 550 16 200 41 750 20 650 15 000 16 200