B 10000 c 4000 4010000 0 note the asset 2

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: cash flow from the previous slide in Year 4. b) + 10,000 c) – 4,000 (.40)*($10,000 – 0). Note, the asset is fully depreciated at the end of Year 4. d) + 5,000 Return of “added” NWC. e) = $19,075 19, 31 Salvage Value. Terminal-year incremental Terminalcash flow. Certified Certified Financial Controller CFC Summary of Project Net Cash Flows Asset Expansion Expansion Year 0 Year 1 Year 2 Year 3 Year 4 –$75,000 75, $33,332 33, $36,446 36, $28,147 28, $37,075 37, Asset Replacement Year 0 Year 1 Year 2 Year 3 Year 4 –$66,600 66, $12,933 12, $16,046 16, $10,147 10, $19,075 19, 32 Certified Financial Controller CFC 16 Capital Budgeting Techniques 33 Certified Financial Controller CFC you should be able to: 1. 2. Understand the three major discounted cash flow (DCF) methods of project evaluation and selection – internal rate of return (IRR), net present value (NPV), and profitability index (PI). 3. Explain the calculation, acceptance criterion, and advantages (over the PBP method) for each of the three...
View Full Document

This note was uploaded on 05/28/2013 for the course FINANCE economy taught by Professor Nill during the Fall '12 term at Bronx School Of Law And Finance.

Ask a homework question - tutors are online