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Unformatted text preview: 6,075
26, The incremental 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 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
Year 0 Year 1 Year 2 Year 3 Year 4 –$75,000* $33,332
75,000* 33, $36,446
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
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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- Fall '12