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    All Workings Are in $'000 Inflation by 8% Sales Revenue Inflation by 4% Variable Cost Inflation by 10% Fixed Cost

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    Wafa Obaid
    This document presents the net present value (NPV) calculation for a potential investment project over 4 years. It includes projections for operating cash flows accounting for inflation factors, training costs, taxes, and working capital changes. It also includes details of a $35,000 capital expenditure in year 1 that is depreciated over 4 years using the straight-line method. The NPV of the project is calculated to be $17,000, indicating the investment should be undertaken.

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    All Workings Are in $'000 Inflation by 8% Sales Revenue Inflation by 4% Variable Cost Inflation by 10% Fixed Cost

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    Wafa Obaid
    7 views2 pages
    This document presents the net present value (NPV) calculation for a potential investment project over 4 years. It includes projections for operating cash flows accounting for inflation factors, training costs, taxes, and working capital changes. It also includes details of a $35,000 capital expenditure in year 1 that is depreciated over 4 years using the straight-line method. The NPV of the project is calculated to be $17,000, indicating the investment should be undertaken.

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    This document presents the net present value (NPV) calculation for a potential investment project over 4 years. It includes projections for operating cash flows accounting for inflation factors, training costs, taxes, and working capital changes. It also includes details of a $35,000 capital expenditure in year 1 that is depreciated over 4 years using the straight-line method. The NPV of the project is calculated to be $17,000, indicating the investment should be undertaken.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    7 views2 pages

    All Workings Are in $'000 Inflation by 8% Sales Revenue Inflation by 4% Variable Cost Inflation by 10% Fixed Cost

    Uploaded by

    Wafa Obaid
    This document presents the net present value (NPV) calculation for a potential investment project over 4 years. It includes projections for operating cash flows accounting for inflation factors, training costs, taxes, and working capital changes. It also includes details of a $35,000 capital expenditure in year 1 that is depreciated over 4 years using the straight-line method. The NPV of the project is calculated to be $17,000, indicating the investment should be undertaken.

    Copyright:

    © All Rights Reserved
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    of 2

    NPV

    All workings are in $'000


    0 1 2 3
    operating cash flow
    inflation by 8% sales revenue 5,160 24,883 49,829
    inflation by 4% variable cost - 2,064 - 9,585 - 18,482
    inflation by 10% fixed cost - 2,700 - 2,970 - 3,267
    training cost - 4,128 - 5,751 - 1,848
    net op. cash flow - 3,732 6,578 26,231
    20% tax on op. cash flow 746 - 1,316 - 5,246
    cost - 35,000
    scrap
    tax saving on CA 1,050 1,050 1,050
    working capital - 1,032 - 1,972 - 2,495 1,143
    net cash flow - 36,032 - 3,908 3,818 23,178
    11% discount factor 1.000 0.901 0.812 0.731
    present value - 36,032 - 3,521 3,100 16,943
    NPV - 17

    4300 19200 35600

    1.2 1.30 1.40


    wOrKiNgS 5160 24883.2 49828.608
    CA
    Y1 Y2 Y3 Y4
    cost (SLM) 35,000 29,750 24,500 19,250
    capital allowance 5,250 5,250 5,250
    29,750 24,500 19,250
    sale proceeds 7,000
    20% tax saving 1,050 1,050 1,050
    balancing allowance 12,250
    tax payment 2,450

    working capital
    Y1 Y2 Y3 Y4
    sales rev 5,160 24,883 49,829 38,396
    working capital 1,032 1,972 2,495 - 1,143
    4

    38,396
    - 13,714
    - 3,594
    - 1,371
    19,717
    - 3,943

    7,000
    2,450
    4,356
    29,579
    0.659
    19,492

    25,400
    1
    1.51
    38396.02176

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