Chapter 8.xlsx - Year 1 2 3 4 5 Beginning UCC $ 3,750 5,813...

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Beginning Ending Year UCC CCA UCC 1 $ 3,750 $ 1,688 $ 2,063 2 5,813 $ 2,616 $ 3,197 3 3,197 $ 1,439 $ 1,758 4 1,758 $ 791 $ 967 5 967 $ 435 $ 532
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Year 0 1 2 3 4 5 (in thousands) 1 Sales - 26,000 26,000 26,000 26,000 - 2 Cost of goods - (11,000) (11,000) (11,000) (11,000) - 3 Gross profit - 15,000 15,000 15,000 15,000 - 4 - (2,800) (2,800) (2,800) (2,800) - 5 Research and development (15,000) - - - - - 6 Capital cost allowance - (1,688) (2,616) (1,439) (791) (435) 7 EBIT (15,000) 10,512 9,584 10,761 11,409 (435) 8 Income tax at 40% 6,000 (4,205) (3,834) (4,304) (4,564) 174 9 Net income (9,000) 6,307 5,750 6,457 6,845 (261) 10 Plus: CCA - 1,688 2,616 1,439 791 435 11 Less: Capital Expenditures (7,500) 12 Less: Increases in NWC - (2,250) - - - 2,250 13 Incremental Cash Flow (16,500) 5,745 8,366 7,896 7,636 2,424 PV of Incremental Cash Flow -16,500 5,130 6,670 5,620 4,853 1,375 NPV 7,148 Selling, general, and administrative
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Year 0 1 2 3 4 5 (in million) 1 Cash requirements - - ### - - ### 2 Inventory - - - - ### 3 Receivables (15% of sales) - 3,900 3,900 3,900 3,900 - 4 Payables (15% of COGS) - (1,650) (1,650) (1,650) (1,650) - 5 Net working capital - 2,250 2,250 2,250 2,250 - 6 Increases in NWC 2,250 - - - (2,250)
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Year 0 1 2 3 4 5 1 Incremental Cash Flow -16,500 5,745 8,366 7,896 7,636 2,424 2 Project required rate of return 12% 3 PV of Cash Flows -16,500 5,130 6,670 5,620 4,853 1,375 4 NPV 7,148 IRR 29.31%
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Year 0 1 2 3 4 5 (in thousands) 1 Sales - 23,500 23,500 23,500
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