Suppose Amazon has decided to introduce the Echo II. Before they launch the Echo II, they conducted an analysis to see if the Echo II would be a desirable investment. The company estimated that it would sell 2 million Echo IIs per year at a price of $160 for the next six years. The initial capital outlay is determined to be $1 billion and a $400 million outlay in net working capital would also be required. Assume that the equipment used will be depreciated using the MACRS 7 year schedule and that the equipment has a salvage value of zero. At the end of year 6, the equipment will be sold for its book value. Also, assume that that the tax rate is 35%.

Using information from Amazons financial statements (you may want to use Morningstar.com or some other online site) estimate the operating cash flows from the project. Make any simplifying assumptions that are necessary to produce the estimate.

OUR BUSINESSES QUOTES MARKETS NEWSV INVESTING/ ADVANCED INVESTING "PERSONALP Period Ending Trend 12/31/2016 12/31/2015 12/31/2014 12/31/2013 InfoQuotes STOCK DETAILS Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain CHARTS Basic Chart Interactive Chart COMPANY NEWS Company $135,987,000 $107,006,000 $88,988,000 $74,452,000 $88,265,000 $71,651,000 $62,752,000 $54,181,000 $47,722,000 $35,355,000 $26,236,000 $20,271,000 Total Revenue Cost of Revenue Gross Profit Operating Expenses Research and Development Sales, General and Admin Non-Recurring Items Other Operating Items Operating Income Add'l incomelexpense items Earnings Before Interest and Tax Interest Expense Earnings Before Tax Income Tax Minority Interest Equity Earnings/Loss Unconsolidated($96,000) $43,536,000 $33,122,000 $26,058,000 $19,526,000 $4,186,000 $2,233,000 $178,000 $745,000 ($206,000) (79,000) ($98,000) $647,000 $484,000 $459,000 $210,000 $141,000 $3,892,000 $1,568,000 ($111,000) $506,000 $161,000 $190,000 Headlines $4,376,000 $2,027,000 $99,000 Press Releases Market Streamm STOCK ANALYSIS Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison FUNDAMEN TALS Call Transcripts $1,425,000 $950,000 $167,000 ($22,000) $37,000 ($71,000) Subsidiary $2,371,000 $596,000 $2,371,000 $596,000 $2,371,000 $596,000 Net Income-Cont. Operations ($241,000) $274,000 ($241,000) $274,000 ($241,000) $274,000 Net Income Net Income Applicable to Common Shareholders OUR BUSINESSES QUOTES MARKETS NEWSV INVESTING/ ADVANCED INVESTING "PERSONALP Period Ending Trend 12/31/2016 12/31/2015 12/31/2014 12/31/2013 InfoQuotes STOCK DETAILS Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain CHARTS Basic Chart Interactive Chart COMPANY NEWS Company $135,987,000 $107,006,000 $88,988,000 $74,452,000 $88,265,000 $71,651,000 $62,752,000 $54,181,000 $47,722,000 $35,355,000 $26,236,000 $20,271,000 Total Revenue Cost of Revenue Gross Profit Operating Expenses Research and Development Sales, General and Admin Non-Recurring Items Other Operating Items Operating Income Add'l incomelexpense items Earnings Before Interest and Tax Interest Expense Earnings Before Tax Income Tax Minority Interest Equity Earnings/Loss Unconsolidated($96,000) $43,536,000 $33,122,000 $26,058,000 $19,526,000 $4,186,000 $2,233,000 $178,000 $745,000 ($206,000) (79,000) ($98,000) $647,000 $484,000 $459,000 $210,000 $141,000 $3,892,000 $1,568,000 ($111,000) $506,000 $161,000 $190,000 Headlines $4,376,000 $2,027,000 $99,000 Press Releases Market Streamm STOCK ANALYSIS Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison FUNDAMEN TALS Call Transcripts $1,425,000 $950,000 $167,000 ($22,000) $37,000 ($71,000) Subsidiary $2,371,000 $596,000 $2,371,000 $596,000 $2,371,000 $596,000 Net Income-Cont. Operations ($241,000) $274,000 ($241,000) $274,000 ($241,000) $274,000 Net Income Net Income Applicable to Common Shareholders