Computation of NPV of the project and annual tax expense | ||||||||
Year | 0 | 1 | 2 | 3 | 4 | 5 | NPV | |
a | Equipment cost | 2,60,000.00 | ||||||
b | Working capital | 63,000.00 | ||||||
c | Repair cost | 19,500.00 | ||||||
d | Annual Revenue | 3,80,000.00 | 3,80,000.00 | 3,80,000.00 | 3,80,000.00 | 3,80,000.00 | ||
e | Variable expense | 1,95,000.00 | 1,95,000.00 | 1,95,000.00 | 1,95,000.00 | 1,95,000.00 | ||
f | Operating costs | 86,000.00 | 86,000.00 | 86,000.00 | 86,000.00 | 86,000.00 | ||
g | Working capital returned | 63,000.00 | ||||||
h | Depreciation | 52,000.00 | 52,000.00 | 52,000.00 | 52,000.00 | 52,000.00 | ||
i | Profit before tax (d-e-f-h-c+g) | 47,000.00 | 27,500.00 | 47,000.00 | 47,000.00 | 1,10,000.00 | ||
j | Taxes (30% of i) | 14,100.00 | 8,250.00 | 14,100.00 | 14,100.00 | 33,000.00 | ||
k | Profit after tax (i-j) | 32,900.00 | 19,250.00 | 32,900.00 | 32,900.00 | 77,000.00 | ||
l | Annual Cashflows (k+h-a-b) | -3,23,000.00 | 84,900.00 | 71,250.00 | 84,900.00 | 84,900.00 | 1,29,000.00 | |
m | Present value of cashflows @12% | -3,23,000.00 | 75,803.57 | 56,800.06 | 60,430.14 | 53,955.48 | 73,198.06 | -2,812.67 |
NPV = | PV of Cash Inflows - PV of Cash Outflows |
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