|
Initial investment (year 0)
|
|
| fixed assets investment |
-2180000 |
| working capital |
-290000 |
|
|
| Year 0 cash flow is |
-2470000 |
|
Year 1 |
Year2 |
Year 3 |
|
|
|
|
|
|
|
|
| Sales |
1730000.00 |
1730000.00 |
1730000.00 |
| Less : costs |
-640000.00 |
-640000.00 |
-640000.00 |
| less : depreciation (2180000/3)= |
-726666.67 |
-726666.67 |
-726666.67 |
|
|
|
|
| Profit before tax |
363333.33 |
363333.33 |
363333.33 |
| less : tax @24% |
-87200.00 |
-87200.00 |
-87200.00 |
|
|
|
|
| Profit after tax |
276133.33 |
276133.33 |
276133.33 |
| Add : Depreciation |
726666.67 |
726666.67 |
726666.67 |
| Add :market value at end |
- |
- |
240000.00 |
|
Less : tax on capital gain 24%
|
|
|
-57600.00 |
|
Add : Working capital received at end
|
|
|
290000.00 |
| Free cash flow |
1002800.00 |
1002800.00 |
1475200.00 |
|
Calcultion of NPV
|
|
|
|
|
| i = 12% |
|
|
|
|
| Year |
0 |
1 |
2 |
3 |
|
|
|
|
|
| free Cash flow |
-2470000 |
1002800.00 |
1002800.00 |
1475200.00 |
| PVF = 1/(1+i)^n= |
1 |
0.8928571429 |
0.7971938776 |
0.7117802478 |
|
for year 1 PVF =1/(1+20%)^1
|
|
|
|
|
| and so on |
|
|
|
|
| PV= FCf * PVF |
-2470000 |
895357.1429 |
799426.0204 |
1050018.222 |
|
|
|
|
|
| NPV (total of pv) |
274801.3848 |
|
|
|
|
|
|
|
|
|
NPV is $274801.38. So project should be
accepted.
|
|
|
|
|
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