5.1 Acai, a company specializing in developing Al technology in food transportation systems, wants to invest in a hardware system for their new office. Listed below is the economic data for the investment: 1 Depreciable Capital - year 0 2 Salvage Value (FMV) (at the end of project life) 3 Non-depreciable Capital-year 0 4 Non-depreciable Capital (at the end of project life) 5 6 7 8 9 10 11 12 13 14 15 16 1 2 d) Calculate the Net Cash Flow from operating income. [8 points] CASH FLOWS Operating Revenue 3 4 5 6 7 8 9 This system qualifies as a special 2-year MACRS Depreciation (with factors 0.6 and 0.4). Assume that the working capital is returned in year 2. Assume that the company has income from other projects and this system is sold at the end of year 2. 10 Expected Revenue ($/yr.) O&M Cost ($/yr.) Useful life (years) 11 Working Capital - year 0 Working Capital - (at the end of the project life) Loan Proceeds - year 0 Interest on Loan - per year 12 Loan Period-years Tax rate - per year ITC - year 1 ITC-year 2 MARR per year Cash Expenses Oper. Income before depr. Depreciation. Oper. Income Interest expense Pretax Net Income Income taxes Investment Tax Credit Net Income AT Depreciation Net C.F. from Oper. 0 $ $ $ $ $ $ 1 $ $ $ $ $ 500,000 90,000 90,000 170,000 1,800,000 300,000 2 250,000 250,000 650,000 10% 2 25% 90,000 120,000 20% 2