Use the following information to complete problems
Initial Investment: $15,000
Salvage Value: $2,000
Yearly Revenue: $7,000
Yearly Expenses: $1,500
Annual Depreciation: $3,000
Project Life: 5 years
Cost of Capital: 7.2%
Tax rate: 25%
1. Calculate the cash flows for each year (years 0 through 5), and the NPV of the project.
2. Yearly revenues grow at 4% per year and yearly expenses grow at 3% per year, working capital is increased from 0 to $1,000 in year 0, working capital is 15% of revenues in years 1-4, working capital is decreased to 0 in year 5. Now calculate the cash flows and NPV of the project.