calculating project cash flows and npv

# calculating project cash flows and npv - Variable Initial...

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Variable Value Variable Value Initial capital expenditure \$1,500,000 Revenue \$720,000 Investment in NWC inventory \$30,000 Cash Expen\$1,530,000 Intial cash outlay \$1,530,000 Depreciati \$150,000 Life of the new production machine 10 years Tax rate 31% Salvage value \$0.00 Depreciation expense \$150,000 per year Units sold 9,000 units Sales price \$110 per unit Variable cost of product \$30 per unit Profit on product \$80 per unit Total Unit profit per year \$720,000 Fixed Costs per year \$190,000 Interest payment \$0 EBIT \$530,000 Net income \$258,750 Marginal tax rate 31% Required rate of return 15% NOPAT \$178,537.50 Operating Cash Flow \$365,700.00 293050 How 920750
Project Revenue \$990,000 Less: Fixed Expense (\$190,000) Less: Variable Expenses (\$270,000) Equals: Gross Profit \$530,000 less: Depreciation (\$150,000) Equals: Net Operating Income \$380,000 Less: Taxes (\$117,800) Equals: NOPAT \$262,200 Plus: depreciation \$150,000 Equals: Operating Cash Flow \$412,200 Terminal Cash Flow final year \$442,200
Variable Value Initial capital expenditure \$600,000 Life of the new trucks 5 years Salvage value (new trucks) \$37,000 Salvage value (existing trucks) \$23,000 5000 Marginal tax rate 25% Fuel use (existing trucks) \$290,000 Fuel use (new trucks) \$230,000

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• Fall '08
• HOYT
• Finance, Generally Accepted Accounting Principles

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