B 10000 c 4000 4010000 0 note the asset

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Unformatted text preview: 6,075 26, The incremental cash flow from the previous slide in th 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 NWC - Project ends. e) = $37,075 37, 25 Salvage Value. Terminal-year incremental Terminalcash flow. 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* $33,332 75,000* 33, $36,446 36, $28,147 28, $37,075 37, * Notice again that this value is a negative Notice again that this value is negative cash flow as we calculated it as the initial cash OUTFLOW in slide 12-23. 26 Certified Financial Controller CFC 13 Example of an Asset Replacement Project Let us assume that previous asset expansion project is actually an asset replacement project. The original basis of the machine was $30,000 and depreciated using straight-line over five years ($6,000 per year). The machine has two years of depreciation and four years of useful life remain...
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