1 Project Investment 1 2 3

New Window -75000 44000 44000 44000

Update Equipment -50000 23000 23000 23000
Build a new stand -125000 70000 70000 70000
Rent a Larger Stand -1000 12000 13000 14000
Discount Rate 15% 0.87 0.76 0.66

2 Year CF Dep DTS(Tax Shield) PVIF

0 -500000
1 200,000 100000 40000 0.925926
2 200,000 100000 40000 0.857339
3 200,000 100000 40000 0.793832
4 200,000 100000 40000 0.73503
5 200,000 100000 40000 0.680583

3
Particular Value Year Dep
Selling Price 150000 5 50000
Cost 500000 6 50000
BV 300000 7 50000
Loss 150000 8 50000
Tax Shield 60000 9 50000
Total Benefit from sale 210000 10 50000

Hence the total benefit if we buy new machine and selling Old machine

4
1997 1998 1999 2000
EBIAT -425 436 470 488
Dep 300 300 300 300
NWC -706 -541 -35 -37
Salvage Value
FCFF -831 195 735 751
PVCF -728.9 150.0 496.1 444.7
NPV -62.2

5
1 2 3 4
EBIAT 165 92 34 -11
Dep 50 50 50 50
NWC -60 12 10 7
FCFF 155 154 94 46
PVCF 140.91 127.27 70.62 31.42
NPV -74.71
Payback(Yrs) ARR IRR
1.704545455 50.7% 35%
2.173913043 25.3% 18%
1.785714286 45.3% 31%
0.083333333 2533.3% 1208%

DTS(PV)Cost Savings after tax

37037.03704 111111.111
34293.55281 102880.658
31753.28964 95259.8689
29401.19411 88203.5823
27223.32788 81669.9836
159708.4015 479125.204

PVIF
0.925925926 18518.5185
0.85733882 17146.7764
0.793832241 15876.6448
0.735029853 14700.5971
0.680583197 13611.6639
0.630169627 12603.3925
Total Benefit 92457.5933
if not sold

256376.0127

2001 2002 2003

507 526 0
300 300
-37 -38 1394
150
770 788 1544
399.9 359.0 617.0

5 6 7 8 9
-46 -73 -94 -110 0
50 50 50 50 50
 6 5 4 16.16 0
10 -18 -40 -43.84
6.21 -10.16 -20.53 -20.45