Question

	0	1	2	3	4
Total initial investment	($457,000)
Operating Cash Flows
Unit sales		250,000	250,000	250,000	250,000
Price per unit		$2.50	$2.50	$2.50	$2.50
Total revenues		$        625,000	$        625,000	$        625,000	$        625,000
Total costs		$        236,400	$        186,000	$        312,000	$        345,600
Operating income		$        388,600	$        439,000	$        313,000	$        279,400
Taxes on operating income		136,010	153,650	109,550	97,790
After-tax operating income		$        252,590	$        285,350	$        203,450	$        181,610
Operating cash flow		$        113,990	$           96,350	$        140,450	$        152,210
Terminal Year Cash Flows
Total termination cash flow					$           53,250
Project Cash Flows
Net cash flows	($457,000)	$113,990	$96,350	$140,450	$205,460
Required return (used as the discount rate)	12%
Payback period	(2.22)
Present value of net cash inflows
Present value of cash outflows
Profitability index	0.90
Internal rate of return (IRR)	7.44%
Net present value (NPV)	($47,870.50)

PV of NCF and PV of CO

Answer 1

The solution of the above is below for your perusal.

	0	1	2	3	4
Total Initial Investment	-457000
Unit Sales		250000	250000	250000	250000
Price Per unit		2.5	2.5	2.5	2.5
Total Revenue		625000	625000	625000	625000
Total Cost		236400	236400	236400	236400
Operating Income		388600	439000	313000	279400
Taxes on Operating Income		136010	153650	109550	97790
After Tax Operating Income		252590	285350	203450	181610
Operating Cash Flow		113990	96350	140450	152210
Terminal Flow Cash Flow					53250
Net Cash Flow	-457000	113990	96350	140450	205460
PV Of Net Cash Inflows @12%		101777	76810	99970	130574
PV Of Cash Outflows @12%	-457000
IRR	7.44%

The Calculation is below