Your company comes up with a new product idea (named as Project A) and has spent $55,000 in marketing research to determine the feasibility of the project. Your company forecast that the product will generate operating cash flow of $120,000 per year for five years. The fixed cost and equipment associated with manufacturing the product is $200,000. $100,000 is required for net working capital. It is expected that the equipment will last for five years with no resale value. Your required rate of return is 20% on project of similar risk. The IRR of project A is 33%.

Table 1: Cash flow of the new product Project A Base Case of R=20% Project A Year 2 3 4 5 OCF ($) 120.000 120.000 120.000 120.000 120.000 ANWC (S) -100.000 100.000 NCS ($) -200.000 CFFA ($) -300.000 120,000 120.000 120,000 120.000 220.000