Your company is considering a project for which you oversee the analysis. The company has spent $100,000 on research & development leading up to the project. The project income statements for this project are:

Year	1	2	3	4
Revenues	$500,000	$550,000	$605,000	$665,500
- Cost of Goods Sold	250,000	275,000	302,500	332,750
- Depreciation	200,000	200,000	200,000	200,000
= EBIT	50,000	75,000	102,500	132,750

The project requires the capital expenditure of $1,000,000 today. At the end of the economic life of the project(i.e., year 4), the firm will salvage the book value ( see the table for the depreciation schedule), Non-cash working capital is anticipated to be 10% of the revenues and must be made at the beginning of each period. In the last period the firm will recover all investment in non-cash working capital. the firm faces a 37% marginal tax rate. The cost of capital is 10%.

1. estimated the free cash flow to the firm for each of the 4 year.

year	0	1	2	3	4
Capex
non-cash flow
revenues
-cost of goods sold		$500,000	$550,000	$605,000	$665,500
- depreciation		250,000	275,000	302,500	332,750
EBIT		200,000	200,000	200,000	200,000
EBIT(1-t)		50,000	75,000	102,500	132,750
+ Depreciation
= operating cash flow
-change in NWC
other adjustments(if needed)
FCF