Your line is currently operating at full standard capacity
You are putting in new equipment which will make the line more efficient and last for 10 years
The equipment will increase the capacity of the line by 30%, or $300,000 in additional sales.
and will eliminate 3 positions of manual labor when fully operational the second year
The line produces a product which has annual sales of $1,000,000 and has a contribution to the business beyound ingredients of $500,000
A manual position of labor costs $30,000 per year with benefits
A 6 month supply of ingredients is kept at all times
The equipment will costs $600,000
engineering and installation will cost $100,000
With the new capacity sales will grow at $100,000 per year until the new capacity is fully utilized.
The company has a WACC of 15% but uses a hurdle rate of 18% for projects of this risk type.
					Year
	CASH FLOW CALCULATIONS				0	1	2	3	4	5	6	7	8	9	10
		Capacity of New Line
		Incremental sales growth
		additional ingredients
		additional advertising
		savings from eliminating manual positions
		increase in income before taxes
		Depreciation
		Estimated taxes at 35%
		Increase in income after taxes
		additional inventory
		cost of equipment
		cost of installation
		NET CASH FLOW			0	-	-	-	-	-	-	-	-	-	-
			Payback			-	-	-	-	-	-	-
			IRR	#NUM!
			NPV	$0.00