Answers
Year | ||||
Sales revenues | 70000 | 0 | -65000 | |
Depreciation Rate = 33.333% | -25000 | 1 | 36883 | |
Operating income (EBIT) | -21665 | 2 | 36883 | |
Operating profit /ebit | 23336 | 3 | 36883 | |
Taxes Rate = 35% | -8167 | |||
Profit After-tax | 15168 | |||
Add depreciation | 21665 | |||
Operating net cash flow | 36883 |
answer = $ 26 584---NPV
| Year | 1 | 2 | 3 |
| Outflow of working capital (a) | (10,000.00) | ||
| Outfloe in fixed assets (b) | (65,000.00) | ||
| Release of working capital ( C ) | 10,000.00 | ||
| Sales revenue | 70,000.00 | 70,000.00 | 70,000.00 |
| Less: Operating cost | 25,000.00 | 25,000.00 | 25,000.00 |
| Depreciation | 21,666.45 | 21,666.45 | 21,666.45 |
| Profit before tax | 23,333.55 | 23,333.55 | 23,333.55 |
| Tax @ 35% | 8,166.74 | 8,166.74 | 8,166.74 |
| Profit after tax | 15,166.81 | 15,166.81 | 15,166.81 |
| Inflow =(Profit after tax+depreciation) (d) | 36,833.26 | 36,833.26 | 36,833.26 |
| Salvage proceeds received | 5,000.00 | ||
| Tax on salvage proceeds @ 35% | 1,750.00 | ||
| Net inflow from salvage proceed (e) | 3,250.00 | ||
| Net inflow/(outflow),f = (a+b+c+d+e) | (38,166.74) | 36,833.26 | 50,083.26 |
| Discounting factor @10% ,g | 0.91 | 0.83 | 0.75 |
| Present value of net inflow/(outflow) (f*g) | (34,697.04) | 30,424.27 | 37,612.53 |
| Therfore total Net present value | = -34,697.038+30,424.271+37,612.526 | ||
| 33,339.76 | |||
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