Project requirement: $10 million investment

Expected to last for 6 years and at the end, the machinery can be sold for $1.949 million.

Accountants will depreciate the equipment using a salvage value of $500,000 over 6 years at the end of year 6 using straight line depreciation.

Income statement (in '000s) is shown as below:

Ca ital investment Accumulated de reciation Year-End book value Workin_ eaital Sales Cost of Goods sold (cash costs) 4749 5251 3261 32610 6332 3668 4890 48901 7915 2085 583 35834 19552 29345 21492 1 949 9500 500 2002 97 17 11830 Other cash costs Depreciation 1331 1464 1611 1772 1583 Pretax prots 4532 Tax (35%) Prot aer tax -2663 1537 6594 10731 7246 1586 2946