Project F: This project requires an initial investment of $2,000,000 in equipment which will cost an additional $100,000 to install. The firm will use the attached MACRS depreciation schedule to expense this equipment. Once the equipment is installed, the company will need to increase net working capital by $230,000. The project will last 6 years at which time the market value for the equipment will be $0. The project will project a product with a sales price of $20.00 per unit and the variable cost per unit will be $7.00. The fixed costs would be $300,000 per year. Because this project is very close to current products sold by the business, management has expressed some favoritism towards this project and as allowed for a reduced rate of return of 4 percentage point below its current WACC as the valuation hurdle it must meet or surpass. Current WACC 11.49%.

Years	2014	2015	2016	2017	2018	2019
Forecasted Units Sold	80,000	80,000	80,000	80,000	80,000	80,000

Depreciation Schedule Modified Accelerated Cost Recovery System (MACRS) 5-Year Investment Class Depreciation Schedule 20% 32% 19% 12% 11% 6% Total 100% Ownership Year 4 6