NPV | 3042721.49 |
Accept since NPV is positive
Workings
Depreciation is only on trucks and equipment.
Annual tax shield = Tax*(Cost-Salvage)/Useful life
= 35%*(9.6m-(5.15-2.1)m)
Year | Initial cost | CF from operations | Tax shield | Salvage | Net CF |
0 | -12050000 | -12050000 | |||
1 | 1950000 | 229250 | 2179250 | ||
2 | 1950000 | 229250 | 2179250 | ||
3 | 1950000 | 229250 | 2179250 | ||
4 | 1950000 | 229250 | 2179250 | ||
5 | 1950000 | 229250 | 2179250 | ||
6 | 1950000 | 229250 | 2179250 | ||
7 | 1950000 | 229250 | 2179250 | ||
8 | 1950000 | 229250 | 2179250 | ||
9 | 1950000 | 229250 | 2179250 | ||
10 | 1950000 | 229250 | 4415000 | 6594250 |
L egge 0.5/1 uestion 13 w Policies w Attempt History rrent Attempt in Progress - Your...
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