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TESLA IS CHOSEN COMPANY! Overview In preparation for your report in Project Two, you will need to calculate the financial ratios needed to determine your chosen business’s current financial health. Once you’ve calculated these ratios, the results will be used to analyze the business’s current financial position and help them make decisions about how to improve or maintain their financial health. Pay particular attention to working capital management. If liquidity is an issue, consider how the company will meet its short-term obligations. Prompt Using the Project Two Financial Formulas spreadsheet and the balance sheet, income statement, and cash flow statement from Mergent Online for your chosen company, calculate the financial ratios for the most recent fiscal quarter. Then, compare those ratios with the same ratios for the same fiscal quarter from one year prior in Mergent Online, and analyze your results. Specifically, you must address the following rubric criteria: Financial Calculations: Calculate accurate financial ratios to assess the business’s current financial health. Specifically, calculate the following ratios: Working capital Current ratio Debt ratio Earnings per share Price/earnings ratio Total asset turnover ratio Financial leverage Net profit margin Return on assets Return on equity Fiscal Quarter Comparison: Using Mergent Online, summarize the differences between the results from your financial calculations of the most recent fiscal quarter and the results of the same financial calculations of the same fiscal quarter from a year before for your chosen business. For example, if the most recent fiscal quarter available is the 3rd quarter in 2020, then you will compare those results to the same financial calculations from the 3rd quarter in 2019. Comparison Analysis: Explain what the results of your calculations and your comparison indicate about the business’s current financial health, providing examples to support your explanation. You might consider the following questions: Do the results indicate the business is financially healthy or financially unhealthy? Which results indicate this? What might be the cause(s) of the business’s financial success or failure? Is more information needed to determine the business’s financial health? If so, which pieces of information might still be needed? Short-Term Financing: Explain how potential short-term financing sources could help the business raise needed funds to improve its financial health. Base your response on the business’s current financial information. The following resources can help you complete this milestone: Video: Mergent Online: Public Company Financials (4:46) Watch this video from the Shapiro Library to learn more about how to access and use Mergent Online. Although this video shows information on the ‘As Reported Currency’ page within the Company Financials tab, for the purposes of this course, the best option for locating financial data can be accessed by clicking on ‘Standardized’ beneath the ‘Company Financials’ tab. This will allow you to access the Standardized Annual Balance Sheet. Shapiro Library FAQ: How Do I Cite a Company Profile From Mergent Online? Use this resource to help answer any questions you have about citing from Mergent Online. Guidelines for Submission Your submission should be a 2 to 3 page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. You must also submit the Project Two Financial Formulas spreadsheet (which you will fill in completely as part of your Project Two submission) and the Excel files for your downloaded balance sheet, income statement, and cash flow statement from Mergent Online. asreported Powered by Clearbit Tesla Inc (NMS: TSLA) Exchange rate used is that of the Year End reported date As Reported Quarterly Cash Flow Report Date 06/30/2021 03/31/2021 09/30/2020 06/30/2020 03/31/2020 09/30/2019 06/30/2019 03/31/2019 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarter Currency USD USD USD USD USD USD USD USD Audit Status Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Consolidated Yes Yes Yes Yes Yes Yes Yes Yes Scale Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Net income (loss) 1642000 464000 566000 197000 68000 -907000 -1056907 -667645 Depreciation, amortization & impairment 1302000 621000 1704000 1120000 553000 1577000 1046149 467577 Stock-based compensation 1088000 614000 1101000 558000 211000 617000 418241 208378 Amortization of debt discounts & issuance costs - - 144000 94000 46000 138000 82123 40108 Inventory & purchase commitments write-downs 88000 49000 140000 88000 45000 - - - Inventory write-downs - - - - - 167000 115672 80843 Loss on disposals of fixed assets - - 67000 12000 7000 69000 47931 18421 Foreign currency transaction net loss (gain) -1000 -2000 144000 38000 19000 -102000 -10848 -39130 Non-cash interest & other operating activities 60000 8000 116000 110000 58000 189000 158699 116050 Digital assets gain, net -78000 -101000 - - - - - - Operating cash flow related to repayment of discounted convertible notes - - - - - -188000 -188107 -188107 Accounts receivable -283000 -24000 -550000 -236000 -14000 -150000 -168312 -99640 Inventory -687000 -106000 -602000 -535000 -981000 -485000 -352428 -809152 Operating lease vehicles -916000 -426000 -640000 -330000 -197000 -467000 -175898 13012 Prepaid expenses & other current assets -131000 -143000 -290000 -301000 -154000 -236000 -139141 -46103 Other non-current assets -289000 -168000 -105000 -16000 40000 46000 42165 28064 Accounts payable & accrued liabilities 1592000 672000 765000 -372000 -265000 142000 49898 -27577 Deferred revenue 279000 162000 118000 -20000 53000 625000 476556 317888 Customer deposits 52000 -2000 -15000 5000 88000 -114000 -160376 -25173 Resale value guarantee - - - - - -112000 -76332 -47394 Other long-term liabilities 47000 23000 261000 112000 -17000 171000 114915 19974 Net cash flows from operating activities 3765000 1641000 2924000 524000 -440000 980000 224000 -639606 Purchases of property & equipment excluding finance leases, net of sales -2853000 -1348000 -2006000 -1001000 -455000 -915000 -529609 -279932 Purchases of solar energy systems, net of sales -22000 -12000 -62000 -46000 -26000 -68000 -43458 -25261 Purchases of digital assets -1500000 -1500000 - - - - - - Receipt of government grants 6000 6000 1000 1000 1000 - - - Proceeds from sales of digital assets 272000 272000 - - - - - - Purchase of intangible assets - - -5000 - - -5000 -5333 - Business combinations, net of cash acquired - - -13000 - - -45000 31012 -650 Net cash flows from investing activities -4097000 -2582000 -2085000 -1046000 -480000 -1033000 -547388 -305843 Proceeds from issuances of common stock in public offerings, net of issuance costs - - 7282000 2309000 2309000 848000 848232 - Proceeds from issuances of convertible & other debt 4862000 2983000 7826000 4946000 2802000 7119000 5007481 1494066 Repayments of convertible & other debt -7408000 -4038000 -7537000 -4226000 -2318000 -5601000 -3700332 -1970709 Collateralized lease repayments -8000 -6000 -224000 -168000 -97000 - - - Collateralized lease borrowing - - - - - - -219323 - Collateralized lease borrowings (repayments) - - - - - -302000 - -133891 Proceeds from exercises of stock options & other stock issuances 253000 183000 361000 217000 160000 167000 95585 77953 Principal payments on finance leases -196000 -101000 -248000 -154000 -100000 -223000 -142571 -66656 Debt issuance costs -5000 -5000 -6000 - - - - - Common stock & debt issuance costs - - - - - -32000 -30376 -7757 Purchase of convertible note hedges - - - - - -476000 -475824 - Proceeds from issuance of warrants - - - - - 174000 174432 - Proceeds from investments by noncontrolling interests in subsidiaries 2000 - 23000 19000 19000 153000 88866 46821 Distributions paid to noncontrolling interests in subsidiaries -65000 -32000 -163000 -110000 -67000 -211000 -148759 -85257 Payments for buy-outs of noncontrolling interests in subsidiaries - - -33000 -2000 - -8000 -7589 -7589 Net cash flows from financing activities -2565000 -1016000 7281000 2831000 2708000 1608000 1489822 -653019 Effect of exchange rate changes on cash & cash equivalents & restricted cash -179000 -221000 100000 14000 -24000 -6000 5471 4878 Net increase (decrease) in cash & cash equivalents & restricted cash -3076000 -2178000 8220000 2323000 1764000 1549000 1171905 -1593590 Cash & cash equivalents & restricted cash, beginning of period 19901000 19901000 6783000 6783000 6783000 4277000 4276388 4276388 Cash & cash equivalents & restricted cash, end of period 16825000 17723000 15003000 9106000 8547000 5826000 5448293 2682798 asreported Powered by Clearbit Tesla Inc (NMS: TSLA) Exchange rate used is that of the Year End reported date As Reported Quarterly Income Statement Report Date 06/30/2021 03/31/2021 09/30/2020 06/30/2020 03/31/2020 09/30/2019 06/30/2019 03/31/2019 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarter Currency USD USD USD USD USD USD USD USD Audit Status Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Consolidated Yes Yes Yes Yes Yes Yes Yes Yes Scale Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Revenue - automotive sales 9874000 8705000 7346000 4911000 4893000 5132000 5168027 3508741 Revenue - automotive leasing 332000 297000 265000 268000 239000 221000 208362 215120 Total automotive revenues 10206000 9002000 7611000 5179000 5132000 5353000 5376389 3723861 Energy generation & storage 801000 494000 579000 370000 293000 402000 368208 324661 Services & other revenues 951000 893000 581000 487000 560000 548000 605079 492942 Total revenues 11958000 10389000 8771000 6036000 5985000 6303000 6349676 4541464 Cost of revenues - automotive sales 7119000 6457000 5361000 3714000 3699000 4014000 4253763 2856209 Cost of revenues - automotive leasing 188000 160000 145000 148000 122000 117000 106322 117092 Total automotive cost of revenues 7307000 6617000 5506000 3862000 3821000 4131000 4360085 2973301 Cost of energy generation & storage 781000 595000 558000 349000 282000 314000 325523 316887 Cost of services & other cost of revenues 986000 962000 644000 558000 648000 667000 743022 685533 Total cost of revenues 9074000 8174000 6708000 4769000 4751000 5112000 5428630 3975721 Gross profit (loss) 2884000 2215000 2063000 1267000 1234000 1191000 921046 565743 Research & development expenses 576000 666000 366000 279000 324000 334000 323898 340174 Selling, general & administrative expenses 973000 1056000 888000 661000 627000 596000 647261 703929 Restructuring & other expenses 23000 -101000 - - - - 117345 43471 Total operating expenses 1572000 1621000 1254000 940000 951000 930000 1088504 1087574 Income (loss) from operations 1312000 594000 809000 327000 283000 261000 -167458 -521831 Interest income 11000 10000 6000 8000 10000 15000 10362 8762 Interest expense 75000 99000 163000 170000 169000 185000 171979 157453 Other income (expense), net 45000 28000 -97000 -15000 -54000 85000 -40756 25750 Income (loss) before income taxes 1293000 533000 555000 150000 70000 176000 -369831 -644772 Provision (benefit) for income taxes 115000 69000 186000 21000 2000 26000 19431 22873 Net income (loss) 1178000 464000 369000 129000 68000 150000 -389262 -667645 Net income (loss) attributable to noncontrolling interests & redeemable noncontrolling interests in subsidiaries -36000 -26000 -38000 -25000 -52000 -7000 -19072 -34490 Net income (loss) attributable to common stockholders 1142000 438000 331000 104000 16000 143000 -408334 -702135 Weighted average shares outstanding - basic 971000 961000 937000 930000 915000 895000 883270 864945 Weighted average shares outstanding - diluted 1119000 1133000 1105000 1035000 995000 920000 883270 864945 Year end shares outstanding 984000 963000 948000 930000 925000 900000 895590 868410 Net income (loss) per share - basic 1.18 0.46 0.32 0.112 0.018 0.16 -0.462 -0.82 Net income (loss) per share - diluted 1.02 0.39 0.27 0.1 0.016 0.156 -0.462 -0.82 asreported Powered by Clearbit Tesla Inc (NMS: TSLA) Exchange rate used is that of the Year End reported date As Reported Quarterly Balance Sheet Report Date 06/30/2021 03/31/2021 09/30/2020 06/30/2020 03/31/2020 09/30/2019 06/30/2019 03/31/2019 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarter Currency USD USD USD USD USD USD USD USD Audit Status Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Consolidated Yes Yes Yes Yes Yes Yes Yes Yes Scale Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Cash & cash equivalents 16229000 17141000 14531000 8615000 8080000 5338000 4954740 2198169 Restricted cash - - - - - 233000 128006 130950 Accounts receivable, net 2129000 1890000 1757000 1485000 1274000 1128000 1147100 1046945 Raw materials 2067000 1836000 1573000 1842000 1653000 1284000 1095888 1079216 Work in process 858000 454000 572000 420000 494000 335000 334641 277155 Finished goods 1318000 1341000 1674000 1379000 1961000 1583000 1600214 2151012 Service parts 490000 501000 399000 377000 386000 379000 351615 329467 Inventory 4733000 4132000 4218000 4018000 4494000 3581000 3382358 3836850 Prepaid expenses & other current assets 1602000 1542000 1238000 1218000 1045000 660000 569748 464908 Total current assets 24693000 24705000 21744000 15336000 14893000 10940000 10181952 7677822 Operating lease vehicles, net 3748000 3396000 2742000 2524000 2527000 2253000 2069540 1972502 Solar energy systems in service - - 6744000 6722000 6703000 6649000 6587439 6461833 Initial direct costs related to customer solar energy system lease acquisition costs - - 103000 103000 102000 102000 101197 101204 Solar energy systems, gross - - 6847000 6825000 6805000 6751000 6688636 6563037 Less: accumulated depreciation & amortization - - 897000 839000 781000 666000 608006 550558 Solar energy systems in service after depreciation & amortization - - 5950000 5986000 - 6085000 6080630 - Solar energy systems under construction - - 25000 28000 24000 23000 49777 49648 Solar energy systems pending interconnection - - 50000 55000 58000 60000 70297 179510 Solar energy systems, net 5883000 5933000 6025000 6069000 6106000 6168000 6200704 6241637 Machinery, equipment, vehicles & office furniture 9156000 8711000 7943000 7687000 7428000 7007000 6919869 6584307 Tooling 2038000 1916000 1794000 1711000 1574000 1477000 1463543 1418368 Leasehold improvements 1596000 1494000 1291000 1157000 1103000 1029000 1010893 987916 Building & building improvements - - - - - - - 2631607 Land & buildings 3725000 3681000 3245000 3172000 3146000 2956000 2839746 - Computer equipment, hardware & software 1148000 1020000 782000 700000 647000 549000 553265 525138 Construction in progress 3826000 2435000 1607000 1012000 812000 700000 543452 622180 Property, plant & equipment, gross 21489000 19257000 16662000 15439000 14710000 13718000 13330768 12769516 Less: accumulated depreciation & amortization 5824000 5389000 4814000 4430000 4072000 3528000 3248310 2918587 Property, plant & equipment, net 15665000 13868000 11848000 11009000 10638000 10190000 10082458 9850929 Operating lease right-of-use assets 1734000 1647000 1375000 1274000 1197000 1234000 1248277 1253027 Digital assets, net 1311000 1331000 - - - - - - Intangible assets, net 283000 299000 318000 312000 323000 351000 327358 273568 Goodwill 203000 206000 203000 196000 193000 186000 153475 74312 MyPower customer notes receivable, net of current portion - - - - - 398000 400308 413181 Restricted cash, net of current portion - - - - - 255000 365547 353679 Other non-current assets 1626000 1587000 1436000 1415000 1373000 820000 842978 801867 Total assets 55146000 52972000 45691000 38135000 37250000 32795000 31872597 28912524 Accounts payable 7558000 6648000 4958000 3638000 3970000 3468000 3133587 3248827 Accrued purchases 1437000 993000 711000 782000 643000 - - - Taxes payable 834000 828000 635000 484000 399000 - - - Payroll & related costs 840000 660000 502000 495000 409000 - - - Accrued warranty reserve, current portion 608000 544000 400000 384000 362000 - - - Sales return reserve, current portion 382000 430000 461000 345000 289000 - - - Financing obligation, current portion - - 48000 47000 53000 - - - Operating lease liabilities, current portion 325000 309000 251000 233000 229000 - - - Resale value guarantees, current portion - - 20000 70000 202000 - - - Accrued interest 60000 36000 51000 91000 55000 - - - Other current liabilities 292000 273000 173000 179000 184000 - - - Accrued liabilities & other current liabilities 4778000 4073000 3252000 3110000 2825000 2497000 2622943 2276951 Deferred revenue 1693000 1592000 1258000 1130000 1186000 1045000 883293 762810 Resale value guarantees - - - - - 441000 526758 480225 Customer deposits 812000 745000 708000 713000 788000 665000 631107 768276 Current portion of debt & finance leases 1530000 1819000 3126000 3679000 3217000 2030000 1791085 1705711 Total current liabilities 16371000 14877000 13302000 12270000 11986000 10146000 9588773 9242800 Recourse debt 3838000 4085000 - - 6011000 - - - Non-recourse debt 3040000 3934000 - - 3468000 - - - Total debt 6878000 8019000 - - 9479000 - - - Finance lease 993000 1034000 - - 1187000 - - - Debt & finance leases, net of current portion 7871000 9053000 10559000 10416000 10666000 11313000 11234401 9787950 Deferred revenue, net of current portion 1318000 1294000 1233000 1198000 1199000 1140000 1182042 1157343 Resale value guarantees, net of current portion - - - - - 38000 61200 211390 Operating lease liabilities 1407000 1330000 1101000 1016000 941000 1028000 1030797 1000886 Accrued warranty reserve, net of current portion 1083000 990000 869000 812000 768000 692000 653095 590211 Sales return reserve, net of current portion 378000 424000 519000 529000 488000 547000 577914 524222 Deferrred tax liabilities 63000 144000 - - - - - - Financing obligation - - 30000 42000 34000 - - - Resale value guarantees - - 36000 36000 36000 - - - Financing obligation, net of current portion - - - - - 42000 44549 45566 Other noncurrent liabilities 405000 395000 494000 435000 400000 367000 349365 314250 Other long-term liabilities 3336000 3283000 3049000 2870000 2667000 2676000 2655720 2475135 Total liabilities 28896000 28507000 28143000 26754000 26518000 25313000 24722136 22874618 Redeemable noncontrolling interests in subsidiaries 605000 601000 608000 613000 632000 600000 580227 570284 Convertible senior notes - - 48000 44000 60000 - - - Common stock 1000 1000 1000 - - - 179 174 Additional paid-in capital 28205000 27623000 21574000 15895000 15390000 12348000 12052458 10563746 Accumulated other comprehensive gain (loss) 206000 143000 125000 -40000 -113000 -120000 -5605 -35019 Retained earnings (accumulated deficit) -3608000 -4750000 -5669000 -6000000 -6104000 -6188000 -6331639 -5923305 Total stockholders' equity (deficit) 24804000 23017000 16031000 9855000 9173000 6040000 5715393 4605596 Noncontrolling interests in subsidiaries 841000 847000 861000 869000 867000 842000 854841 862026 RATIOS ACCOUNTING & FINANCIAL RATIOS CURRENT RATIO (Current Assets / Current Liabilities) TOTAL ASSET TURNOVER RATIO (Total Revenue / Total Assets) Current Assets Total Revenue Current Liabilities ERROR:#DIV/0! Total Assets ERROR:#DIV/0! WORKING CAPITAL (Current Assets - Current Liabilities) : *Note to students: Be mindful of the scale being used in Mergent Online when filling this out. If a number is written as 12.53, that does not mean the total for that item is $12.53. There could be numerous zeros written after it, depending on the scale labeled above. In this example, 12.53 is actually $12,530,000. (To delete this comment, right-click on the "WORKING CAPITAL" box, then select Delete Comment from the drop-down menu.) FINANCIAL LEVERAGE (Total Assets / Shareholder's Equity) Current Assets Total Assets Current Liabilities 0 Shareholder's Equity ERROR:#DIV/0! DEBT RATIO (Total Debt / Total Assets) NET PROFIT MARGIN (Net Income / Total Revenue) Total Debt Net Income Total Assets ERROR:#DIV/0! Total Revenue ERROR:#DIV/0! EARNINGS PER SHARE (Net Income / Weighted Average Common Shares Outstanding) RETURN ON ASSETS (Net Income / Total Assets) Net Income Net Income Shares Outstanding ERROR:#DIV/0! Total Assets ERROR:#DIV/0! PRICE EARNINGS RATIO (Share Price (end of quarter / EPS) RETURN ON EQUITY (Net Income - Preferred Dividends / Shareholder's Equity) Stock Price NI - Pref. Div. EPS ERROR:#DIV/0! Shareholder's Equity ERROR:#DIV/0! Monthly Time Value of Money - Monthly Compounding Rate of Return Year 1 Initial Investment Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 2 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 3 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 4 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 5 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 6 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 7 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 8 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 9 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Year 10 Month 1 2 3 4 5 6 7 8 9 10 11 12 Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Annual Time Value of Money - Annual Compounding Rate of Return Year 1 2 3 4 5 6 7 8 9 10 Initial Investment Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 PV Time Value of Money - Present Value Annuity Number of Years Rate of Return $0.00 Payment FV Time Value of Money - Future Value Annuity Number of Years Rate of Return $0.00 Payment PV - Lump Sum Time Value of Money - Present Value of Lump Sum Rate Years $0.00 Initial Investment FV - Lump Sum Time Value of Money - Future Value of Lump Sum Rate Years $0.00 Initial Investment NPV Net Present Value (NPV) Calculator Building Initial Investment Year 1 2 3 4 5 6 7 8 9 10 Annual Cash Inflows Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Discount Rate NPV = $0 Year 11 12 13 14 15 16 17 18 19 20 Number of Years Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Salvage Value Equipment Initial Investment Year 1 2 3 4 5 6 7 8 9 10 Annual Cash Inflows Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Discount Rate NPV = $0 Year 11 12 13 14 15 16 17 18 19 20 Number of Years Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Salvage Value Bonds Initial Investment Annual Cash Inflows Discount Rate NPV = $0 Year 1 2 3 4 5 6 7 8 9 10 Number of Years Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Principal Returned