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Unformatted text preview: ght from book
∆CA  ∆CL
100
$2.00
$200.00
$120.00
$108.00
$228.00
$28.00
$11.20
$16.80
$108.00
$91.20 100
100
$2.00
$2.00
$200.00
$200.00
$120.00
$120.00
$36.00
$16.80
$156.00 $136.80
$44.00
$63.20
$17.60 $25.28
$26.40
$37.92
$36.00
$16.80
$62.40 $54.72 <<<<<<<<<<< Equal number of sales
Equal price
Product
60% of TR
Respective depr. Rate * $240 (CAPEX)
SUM
TR  TC
EBIT*Tax rate
EBIT  T
Depreciation
SUM $91.20
$89.12
 $25.00
$10.00
$15.00
$20.00
$89.72
$63.00
3.30 <<<<< Straight from the book
Salvage value * Tax rate
Difference
Add back ∆NOWC
Formula implementation Formula
Formula
Formula
Formula $62.40
$26.72
 Negative NPV so
reject the project Tax rate
WACC 40%
10%
0 Depr. Rate 1 2
33% a 5. If the machine was sold for less than
its book value, then the tax effect would
be positive 3
45% 4
15% 7% Scenario Summary
Current Values: Sales 30% Sales 20% Sales 10% Sales Base Sales +10% Sales +20% Sales +30% Salvage 30% Salvage 20% Salvage 10% Salvage Base Salvage +10% Salvage +20% Salvage +30% WACC 30% WACC 20% WACC 10% WAC...
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 Winter '13
 Ned
 Revenue, Sales

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