We assume salvage value of 3 million in real terms

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Unformatted text preview: ). We assume salvage value of $3 million in real terms less tax at 35% at the end of 2024. 3. Working Capital: We assume inventory in year t is 9.1% of expected revenues in year (t + 1). We also assume that receivables less payables, in year t, is equal to 5% of revenues in year t. 4. Depreciation Tax Shield: Based on 35% tax rate and 5-year MACRS class. This is a simplifying and probably inaccurate assumption; i.e., not all the investment would fall in the 5-year class. Also, the factory is currently owned by the company and may already be partially depreciated. W...
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