Tax rate | 23% | |||||||
Calculation of annual depreciation | ||||||||
Depreciation | Year-1 | Year-2 | Year-3 | Year-4 | Year-5 | Total | ||
Cost | $ 3,450,000 | $ 3,450,000 | $ 3,450,000 | $ 3,450,000 | $ 3,450,000 | |||
Dep Rate | 100.00% | 0.00% | 0.00% | 0.00% | 0.00% | |||
Depreciation | $ 3,450,000 | $ - | $ - | $ - | $ - | $ 3,450,000 | ||
Calculation of after-tax salvage value | ||||||||
Cost of machine | $ 3,450,000 | |||||||
Depreciation | $ 3,450,000 | |||||||
WDV | $ - | |||||||
Sale price | $ 400,000 | |||||||
Profit/(Loss) | $ 400,000 | |||||||
Tax | $ 92,000 | |||||||
Sale price after-tax | $ 308,000 | |||||||
Calculation of annual operating cash flow | ||||||||
Year-1 | Year-2 | Year-3 | Year-4 | |||||
No of units | 3,920.00 | 4,820.00 | 5,440.00 | 4,330.00 | ||||
Selling price | $ 635.00 | $ 635.00 | $ 635.00 | $ 635.00 | ||||
Operating ost-15% of 635 | $ 95.25 | $ 95.25 | $ 95.25 | $ 95.25 | ||||
Sale | $ 2,489,200 | $ 3,060,700 | $ 3,454,400 | $ 2,749,550 | ||||
Less: Operating Cost | $ 373,380 | $ 459,105 | $ 518,160 | $ 412,433 | ||||
Contribution | $ 2,115,820 | $ 2,601,595 | $ 2,936,240 | $ 2,337,118 | ||||
Less: Fixed cost | $ 410,000 | $ 410,000 | $ 410,000 | $ 410,000 | ||||
Less: Depreciation | $ 3,450,000 | $ - | $ - | $ - | ||||
Profit before tax | $ (1,744,180) | $ 2,191,595 | $ 2,526,240 | $ 1,927,118 | ||||
Tax@23% | $ (401,161) | $ 504,067 | $ 581,035 | $ 443,237 | ||||
Profit After Tax | $ (1,343,019) | $ 1,687,528 | $ 1,945,205 | $ 1,483,880 | ||||
Add Depreciation | $ 3,450,000 | $ - | $ - | $ - | ||||
Cash Profit after-tax | $ 2,106,981 | $ 1,687,528 | $ 1,945,205 | $ 1,483,880 | ||||
Calculation of NPV | ||||||||
13.00% | ||||||||
Year | Capital | Working capital | Operating cash | Annual Cash flow | PV factor | Present values | ||
0 | $ (3,450,000.00) | $ (123,000.00) | $(3,573,000.00) | 1.0000 | $(3,573,000.00) | |||
1 | $ - | $ 2,106,981.40 | $ 2,106,981.40 | 0.8850 | $ 1,864,585.31 | |||
2 | $ - | $ 1,687,528.15 | $ 1,687,528.15 | 0.7831 | $ 1,321,582.07 | |||
3 | $ - | $ 1,945,204.80 | $ 1,945,204.80 | 0.6931 | $ 1,348,124.50 | |||
4 | $ 308,000.00 | $ 123,000.00 | $ 1,483,880.48 | $ 1,914,880.48 | 0.6133 | $ 1,174,432.06 | ||
Net Present Value | $ 2,135,723.94 |
You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine...
You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $1.45 million in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $1.55 million on an aftertax basis. In four years,...
You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.85 million in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $3.05 million on an aftertax basis. In four years,...
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You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ). manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.85 million in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $3.05 million on an aftertax basis. In four years,...
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You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.85 million in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $3.05 million on an aftertax basis. In four years,...
You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.8 million in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $3 million on an aftertax basis. In four years,...
You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.1 million in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $2.3 million on as an after tax basis. In...