Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Initial Investment (899,900) Cash ows from operating activities Revenue from sales 200,000 200,000 220,000 220,000 220,000 280,000 280,000 280,000 Less cash paid for: Materials (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) Wages (900,000) (900,000) (900,000) (900,000) (900,000) (960,000) (960,000) (960,000) Benets (270,000) (270,000) (270,000) (270,000) (270,000) (288,000) (288,000) (288,000) R&D (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) Interest 0 0 0 0 0 0 0 Maintenance at 5% (44,995) (44,995) (44,995) (44,995) (44,995) (44,995) (44,995) (44,995) Other operating expenses (15,000) (15,000) (15,000) (15,000) (15,000) (16,000) (16,000) (16,000) Income taxes (42,000) (42,000) (46,200) (46,200) (46,200) (58,800) (58,800) (58,800) Net cash from operating activities (1,286,995) (1,286,995) (1,291,195) (1,291 ,195) (1 ,291,195) (1,382,795) (1,382,795) (1,382,795) Net cash flow 0 (2,373,990) (2,373,990) (2,362,390) (2,362,390) (2,362,390) (2,485,590) (2,485,590) (2,485,590) PV factor at 10% ' 0.9091 0.8264 0.7513 0.683 0.6209 0.5645 0.5132 0.4665 Pesent Value (2,158,194) (1,961,865) (1,774,864) (1,613,512) (1,466,808) (1,403,116) (1,275,605) (1,159,528) (13,713,392) Internal Rate of Return Present Value Index Payback