| Quiz 4 |
| Michael D. Lopez |
| | | WACC | 10.00% | | NPV | $ 622 |
| | | Tax | 40% | | IRR | 11.1% |
| | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
| Investment: |
| Capital Outlay | $ (16,000) | $ (2,000) | $ - 0 | $ - 0 | $ - 0 | $ - 0 | $ - 0 |
| Net Working Capital (10% Sales) | $ - 0 | $ (400) | $ (600) | $ - 0 | $ - 0 | $ - 0 | $ - 0 |
| Total Investment | $ (16,000) | $ (2,400) | $ (600) | $ - 0 | $ - 0 | $ - 0 | $ - 0 |
| Net Working Capital (Full Recovery) | | | | | | | $ 1,000 |
| Sales Revenue | | $ 4,000 | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 |
| Cost of Good Sold (75% Sales) | 75% | $ (3,000) | $ (7,500) | $ (7,500) | $ (7,500) | $ (7,500) | $ (7,500) |
| SG&A (5% Sales) | 5% | $ (200) | $ (500) | $ (500) | $ (500) | $ (500) | $ (500) |
| Operating Savings | | $ 2,000 | $ 3,500 | $ 3,500 | $ 3,500 | $ 3,500 | $ 3,500 |
| Net revenue increase | | $ 2,800 | $ 5,500 | $ 5,500 | $ 5,500 | $ 5,500 | $ 5,500 |
| Taxes | | $ (1,120) | $ (2,200) | $ (2,200) | $ (2,200) | $ (2,200) | $ (2,200) |
| Depreciation ($18,000/6) | | $ 3,000 | $ 3,000 | $ 3,000 | $ 3,000 | $ 3,000 | $ 3,000 |
| Tax Savings | | $ 1,200 | $ 1,200 | $ 1,200 | $ 1,200 | $ 1,200 | $ 1,200 |
| Sale of equipment | | | | | | | $ 1,800 |
| Taxes on Sale | | | | | | | $ (720) |
| Free Cash Flows | $ (16,000) | $ 480 | $ 3,900 | $ 4,500 | $ 4,500 | $ 4,500 | $ 6,580 |
eqp96
Quiz4-LOPEZ.xlsx
