Yummies is thinking of starting a new line of coffee business: coffee trucks will deliver coffee from popular brands to customers' doors and customize coffee flavor right there. The company estimates that it will cost $900,000 to immediately invest into new delivery vehicles and coffee brewing machines. The estimated operating cash flow will equal $190,000 per year. At the end of Year 8 this pilot coffee delivery project will be over, at which time all used vehicles and equipment will be sold at the after-tax salvage value of $250,000. The company also plans to immediately set aside $15,000 in cash, and this will be increased by $5,000 each year.

If no loan is used, the required rate of return on this project is 11%.

If, however, the company does take a loan, it will equal 70% of the initial cost of the equipment (i.e., delivery vehicles and coffee brewing machines), it will be an interest-only loan, with the annual interest rate of 4.5%.

Calculate unlevered cash flows for this project.

Year 0 cash flow equals $ 495,000, 490,000, 455,000, 440,000, 195,000, 190,000, 185,000, -900,000, -915,000

• Intermediate year's cash flow (i.e., for each year) equals $ 495,000, 490,000, 455,000, 440,000, 195,000, 190,000, 185,000, -900,000, -915,000
• Final year's cash flow equals $