e) income) Income Revenue EBITDA Income ($ million) ($ million) ($ million) ($ million) ($ million) ($ million) ($ million) ($ million) ($ million) -$173 -$254 -$246 -$500 -$253 -$753 -$194 -$947 -$132 -$1,080 $1,089 -$1,147 $1,415 Advances and Opportunities in Next-Generation SONET $0.12 million in taxes (a 40 percent rate), ELEC A has a net of $0.18 million, or an 18 percent net margin. Over 5 years this company would have gener- ated $0.9 million of net income. Table 1-9 shows that a valuation of 5 times the forward revenue has an IRR of the project at -39 percent. A valuation at 0.5 times the forward revenue has an IRR of 23 percent. Notice that a metric that stated 3 times the forward net income ($0.54 million) produced practically the same results. Now consider ELEC B with $1 million in annualized revenue, $0.2 mil- lion annually in SGA, $0.2 million annually in operations costs, $0.15 mil- lion annually in (amortized) equipment costs, and $0.15 million annually in recurring facilities costs. Also assume that the company has a $1 million Table 1-9 ELEC A ELEC B Impact of Debt on ELEC's Valuation Year 0 (valuation) -$5.00 Year 0 (valuation) -$5.00 Year 1 $0.18 Year 1 $0.04 Year 2 $0.18 Year 2 $0.04 Year 3 $0.18 Year 3 $0.04 Year 4 $0.18 Year 4 $0.04 Year 5 $0.18 Year 5 $0.04 Year 0 (valuation) -$1.00 Year 0 (valuation) -$0.50 Year 1 $0.18 Year 1 $0.04 Year 2 $0.18 Year 2 $0.04 Year 3 $0.18 Year 3 $0.04 Year 4 $0.18 Year 4 $0.04 Year 5 $0.18 Year 5 $0.04 Year 0 (valuation) -$0.50 Year 0 (valuation) -$0.11 Year 1 $0.18 Year 1 $0.04 Year 2 $0.18 Year 2 $0.04 Year 3 $0.18 Year 3 $0.04 Year 4 $0.18 Year 4 $0.04 Year 5 $0.18 Year 5 $0.04 Chapter 1 debt, which it is repaying in five years ($0.2 million per year), plus interest of $0.036 million per year (6 percent interest on a $1 million loan). ELEC B's bottom line would be $1 million-$0.936 million=$0.064 million. Deducting $0.025 million in taxes (a 40 percent rate), ELEC B has a net of $0.039 million, or a 3.9 percent net margin. Over 5 years this company would