![Calculation of NPV - 2 Cm Thickness Year 3 Year 4 Year 0 Year 1 Year 2 -$20,000 $5,000 $5,000 -$5,000 $5,000 $0 $0 $5,000 $5,](//img.homeworklib.com/questions/caf1bf00-7412-11ea-a49f-596879728192.png?x-oss-process=image/resize,w_560)
![Calculation of NPV - 5 Cm Thickness Particulars Initial Cost Annual Savings Less: Depreciation Earnings Before Tax Less: Tax](//img.homeworklib.com/questions/cb52aa00-7412-11ea-b41c-ff40ef679bf9.png?x-oss-process=image/resize,w_560)
Since the NPV of 5cm Thickness is positive, 5cm Thickness can be
selected.
Calculation of NPV - 2 Cm Thickness Year 3 Year 4 Year 0 Year 1 Year 2 -$20,000 $5,000 $5,000 -$5,000 $5,000 $0 $0 $5,000 $5,000 $0 $5,000 -$5,000 Particulars Initial Cost Annual Savings Less: Depreciation Earnings Before Tax Less: Tax Earnings After Tax Add: Depreciation Cash Flow After Tax PV Factor @ 10% Discounted Cashflow so SO $0 $5,000 $5.000 0.9091 $4,546 $0 $5,000 $5,000 0.8265 $4,133 $5,000 $5.000 0.7514 $3,757 1.00001 -$20,000 NPV $5,000 $5,000 0.6831 $3,416 -S4,150
Calculation of NPV - 5 Cm Thickness Particulars Initial Cost Annual Savings Less: Depreciation Earnings Before Tax Less: Tax @ 32% Earnings After Tax Add: Depreciation Cash Flow After Tax PV Factor @ 10% Discounted Cashflow Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 -$36,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 -$6,000 -$6.0001 -$6,000 $6,000 -$6,000 -$6,000 $4,000 $4,000 $4,000 $4.000 $4,000 $4.000 $1.280 $1.280 $1.280 $1.280 $1,280 $1,280 $2.720 $2.720 $2.720 $2.720 $2,720 $2.720 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 -$36,000 $8.720 $8.720 $8,7201 $8.720 $8.720 $8,720 1.0000 0.9091 0.8265 0.7514 0.6831 0.6210| 0.5645 -$36,000 $7,927 $7,207 $6,552 $5,957 $5,415 $4,922 NPV $1,981