Homework Answers
| NPV | 1586.64 |
Annual depreciation = (60000)/5 = 12000
Book value at sales = 60000-12000*3 = 24000
There is a loss on sale, hence there will be taxsavings
| Year | 0 | 1 | 2 | 3 |
| Capital spending | -60000 | 22800 | ||
| Net working capital | -2000 | 2000 | ||
| OCF | 18600 | 18600 | 18600 | |
| TotalCash flows | -62000 | 18600 | 18600 | 43400 |
| NPV | 1586.64 |
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