Step 1: Evaluate Cash Flows a)Initial Outlay: What is the cash flow at “time0?” (Purchase price of the asset) +(shipping and installation costs) Depreciable asset) + (Investment in working capital) After-tax proceeds from sale of old asset Net Initial outlayStep 1: Evaluate Cash Flows • a) Initial Outlay: What is the cash flow at “time 0?” (Purchase price of the asset) + (shipping and installation costs) (Depreciable asset) + (Investment in working capital) + After-tax proceeds from sale of old asset Net Initial Outlay