Research and development $10,000,000 Test marketing cost $5,000,000 Initial equipment cost $140,000,000 Equipment salvage value $54,000,000 Year 1 depreciation 14.30% Year 2 depreciation 24.50% Year 3 depreciation 17.50% Year 4 depreciation 12.50% OEM market: Price $38 Variable cost $22 Automobile production 5,600,000 Growth rate 2.50% Market share 11.00% Replacement market: Price $59 Variable cost Market sales 14,000,000 Growth rate 2.00% Market share 8.00% Price increase above inflation 1% VC increase above inflation 1% Marketing and general costs $26,000,000 Tax rate 40.00% Inflation rate 3.25% Required return 15.90% Initial NWC $9,000,000 NWC percentage of sales 15% Nominal price increase Nominal VC increase Year 0 Year 1 Year 2 Year 3 Year 4 OEM: Automobiles sold Tires for automobiles sold SuperTread tires sold Price Replacement market: Total tires sold in market SuperTread tires sold Price Revenue: OEM market Replacement market Total Variable costs: OEM market Replacement market Total Revenue Variable costs Marketing and general costs Depreciation EBT Tax Net income OCF New working capital: Beginning Ending NWC cash flow Book value of equipment Aftertax salvage value: Market value Taxes Total Year 0 Year 1 Year 2 Year 3 Year 4 Operating cash flow Capital spending Net working capital Total cash flows NPV IRR Profitability index On Excel.