You work for Apple. After toiling away on $10 million worth of prototypes, you have finally produced your answer to Google Glasses: iGlasses (the name alone is genius). iGlasses will instantly transport the wearer into the world as Apple wants you to experience it: iTunes with the wink of an eye and apps that can be activated just by looking at them. You think that these will sell for 5 years until the next big thing comes along (or until the users are unable to interact with actual human beings). Revenues are projected to be $450 million per year along with expenses of $350 million. You will need to spend $60 million immediately on additional equipment that put into use in year 1 and will be depreciated using the 5-year MACRS schedule. Additionally, you will use some fully-depreciated existing equipment that has a market value of $10 million. As the iGlasses are an outcome of the R&D center, Apple thinks it should charge $5 million of the annual costs of the center to the iGlasses product for 5 years. Finally, Apples working capital levels will increase from their current level of $120 million to $140 million immediately. They will remain at the elevated level until year 5, when they will return to $120 million. Apples discount rate for this project is 15% and its tax rate is 35%. Calculate the free cash flows and determine the NPV of this project.

	Year
Depreciation
MACRS Schedule
Depreciation (in Millions)
NPV
	Year
Change in NWC
Net Working Capital
Change in NWC
Cash Flow
	Year
Revenues
Costs
Depreciation
Taxable Income
Tax
Net Income
Add back Depreciation
CapEx
Opportunity Cost
CF from Change NWC
FCF
NPV