The income statement is now as follows:

The cash flow statement excerpt is now as follows:

The cash flow formula is EBIT plus depreciation (or use EBITDA instead) minus capital expenditures, minus corporate income tax. For year 1, this is: $36 + $30 − $120 − $18 = −$72. The first levered equity cash flows are −$72 + $100 = +$28.

Transcribed Image Text:

- - Year Sales (Revenues) Cost of Goods Sold (COGS) 1 2 3 4 $6 $6 $6 $6 $6 Selling, General & Administrative Expenses (SG&A) $8 $8 $8 $8 $8 $80 $80 $80 $80 $80 ST 5