You are opening a desperately needed coffee shop near the GSM. The annual lease cost will be $36,000 (due at year end). You estimate the equipment will cost you $60,000 (today), which you can depreciate straight-line to zero book value over five years. At the end of five years, you project that you can sell the equipment for $15,000. Annual sales will be $450,000, and annual operating costs (excluding the lease cost) will be $360,000. Finally, you anticipate that you will need to set aside 10% of sales to finance inventories and other working capital needs. (Assume the working capital will be set aside on the first day of the project and fully recovered at the end of the project.) You will pay a combined state and federal tax rate of 40%.

Create a table similar to the one below to project the cash flows for your proposed venture. (Note: Cash flows in Years 1 to 4 are the same. There is no need to calculate the project NPV.)