We did this example in class tonight, and I have no idea how she came up with the numbers in the cash flows. ,,Pre-startup advertising and marketing,, expenses $ 80,000,, Pre-startup cost of new equipment,, (assume 5-year SL) $200,000,, Investment in market research undertaken,, last year $100,000,, Incremental sales volume in units (years 1-3) 50,000,, Incremental sales volume in units (years 4-6) 60,000,, Selling price per unit $ 15,, Foregone sales volume of current products,, (years 1 – 6) $ 50,000,, Cost to manufacture (per unit) $ 8,, Incremental cash expenses (years 1-6) $200,000,, Corporate tax rate 34%,, Corporate cost of capital 14%,, Permanent working capital required at outset,,, to be restored to cash at the end of the,, project’s life $ 50,000 ,,,,,I have to figure out ,,Revenue,Cost,Lost GM,Expenses,Deprecitaion,EBT contribution,Tax @ 34%,EAT impact,Add back,Depreciation,Operating Cash,flow,Working capital,Net cash flow,,*for each of those I need to know year 1-3 year 4-5 and then year 6. ,,I don’t know how to calculate each one, so if you could please show me how so I know how in the future please. Thanks!!
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