Net Cash Flow

Y0 1 2 3 4 5 6 7 8 9 10 Totals
Net Capital Costs
Capital Project Name $ (8,000,000) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (8,000,000)

Total Capital $ (8,000,000) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (8,000,000)

Operating and Maintenance Costs

Cost 1 $ (750,000) $ (750,000) $ (750,000) $ (750,000) $ (750,000) $ (750,000) $ (750,000) $ (750,000) $ (750,000) $ (750,000) $ (7,500,000)
Cost 2 $ (250,000) $ (250,000) $ (250,000) $ (250,000) $ (250,000) $ (250,000) $ (250,000) $ (250,000) $ (250,000) $ (250,000) $ (2,500,000)
Escalation of Costs $ (20,000) $ (40,400) $ (61,208) $ (82,432) $ (104,081) $ (126,162) $ (148,686) $ (171,659) $ (195,093) $ (218,994) $ (1,168,715)
Total Costs $ - $ (1,020,000) $ (1,040,400) $ (1,061,208) $ (1,082,432) $ (1,104,081) $ (1,126,162) $ (1,148,686) $ (1,171,659) $ (1,195,093) $ (1,218,994) $ (11,168,715)

Revenue and Operating Benefits

New Revenue $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 250,000 $ 2,500,000
Benefit 1 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 15,000,000
Benefit 2 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 750,000 $ 7,500,000
Escalation of Benefits $ 55,000 $ 111,210 $ 168,657 $ 227,367 $ 287,369 $ 348,691 $ 411,362 $ 475,412 $ 540,872 $ 607,771 $ 3,233,711
Total Benefits and Revenue $ - $ 2,555,000 $ 2,611,210 $ 2,668,657 $ 2,727,367 $ 2,787,369 $ 2,848,691 $ 2,911,362 $ 2,975,412 $ 3,040,872 $ 3,107,771 $ 28,233,711

Cash Flow Before Taxes $ (8,000,000) $ 1,535,000 $ 1,570,810 $ 1,607,449 $ 1,644,935 $ 1,683,288 $ 1,722,529 $ 1,762,677 $ 1,803,753 $ 1,845,779 $ 1,888,776 $ 9,064,996

Income Tax Calculation

Depreciation Expense $ (1,600,000) $ (2,560,000) $ (1,536,000) $ (921,600) $ (921,600) $ (460,800) $ - $ - $ - $ - $ (8,000,000)
Operating Cost $ (1,020,000) $ (1,040,400) $ (1,061,208) $ (1,082,432) $ (1,104,081) $ (1,126,162) $ (1,148,686) $ (1,171,659) $ (1,195,093) $ (1,218,994) $ (11,168,715)
Operating Benefits $ 2,555,000 $ 2,611,210 $ 2,668,657 $ 2,727,367 $ 2,787,369 $ 2,848,691 $ 2,911,362 $ 2,975,412 $ 3,040,872 $ 3,107,771 $ 28,233,711
Net Income Taxes $ - $ 26,000 $ 395,676 $ (28,579) $ (289,334) $ (304,675) $ (504,692) $ (705,071) $ (721,501) $ (738,312) $ (755,511) $ (3,625,998)

Cash Flow After Taxes $ (8,000,000) $ 1,561,000 $ 1,966,486 $ 1,578,869 $ 1,355,601 $ 1,378,613 $ 1,217,837 $ 1,057,606 $ 1,082,252 $ 1,107,467 $ 1,133,266 $ 5,438,997

Discounted Cash Flow (After Tax) $ (8,000,000) $ 1,445,370 $ 1,685,945 $ 1,253,357 $ 996,407 $ 938,261 $ 767,444 $ 617,103 $ 584,707 $ 554,009 $ 524,921 $ 1,367,525

Business Case Results: Assumptions:

NPV of Cash Flow $ 1,367,525 Cost Escalation Factor 2.00%
IRR 12.1% Benefit Escalation Factor 2.20%
Profitability Index 1.17 Income Tax Rate 40.00%
Simple Payback 5 Years 2 Months Discount Rate 8.00%
Discounted Payback 7 Years 6 Months

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Depreciation Expense
Y0 1 2 3 4 5 6 7 8 9 10 Totals
Net Capital Costs (8,000,000.00) (8,000,000.00)
Depreciation Expense (1,600,000.00) (2,560,000.00) (1,536,000.00) (921,600.00) (921,600.00) (460,800.00) - - - - (8,000,000.00)

Depreciation - 5 Year (MACRS) 20.00% 32.00% 19.20% 11.52% 11.52% 5.76%

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Payback Calculation
Y0 1 2 3 4 5 6 7 8 9 10 Totals
Simple Cash Flow $ 8,000,000 $ 1,561,000 $ 1,966,486 $ 1,578,869 $ 1,355,601 $ 1,378,613 $ 1,217,837 $ 1,057,606 $ 1,082,252 $ 1,107,467 $ 1,133,266
Cumulative Simple Payback $ 1,561,000 $ 3,527,486 $ 5,106,355 $ 6,461,956 $ 7,840,569 $ 9,058,406 $ 10,116,013 $ 11,198,264 $ 12,305,732 $ 13,438,997

Discounted Cash Flow $ 8,000,000 $ 1,445,370 $ 1,685,945 $ 1,253,357 $ 996,407 $ 938,261 $ 767,444 $ 617,103 $ 584,707 $ 554,009 $ 524,921
Cumulative Discounted Payback $ 1,445,370 $ 3,131,315 $ 4,384,672 $ 5,381,080 $ 6,319,340 $ 7,086,784 $ 7,703,887 $ 8,288,594 $ 8,842,604 $ 9,367,525

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