New Old

Delivered Cost 154,000 Current Book Value

Additional Installation Cost 6,000 Annual Depr. Charge
Estimated Life 15 Years Salvage Value
Salvage Value 0 Removal Cost
Annual Savings 35000 Tax Recaptured on Depreciation
Tax Deductions 14000 Cashflow from removing Old System
CFs after tax deductions 21000
Depreciation 32000
Cost of Capital
Annual Savings 35000 Tax Rate
Less Depreciation 32000
Saving After Depr. 3000
Tax Expense 1200
Saving After Depr. And Tax 1800
Add Depr. 32000
Net Cashflow 33800

Years 0 1 2
Annual Savings 35000 35000
Less Depreciation 32000 32000
Saving After Depr. 3000 3000
Tax Expense -1200 -1200
Net Cashflow -146600 33800 33800
DCF $29,391.30 $25,557.66

Initial Cost ($146,600.00)

NPV $165,702.36
NPV Final $19,102.36
IRR 18%
Payback Period 4.37869822485
Discounted Payback Period 10.0327575605

Years 0 1 2
Annual Savings 35000 35000
Less Depreciation 32000 32000
Saving After Depr. 3000 3000
Tax Expense -1500 -1500
Net Cashflow -146600 33500 33500
DCF $29,130.43 $25,330.81

Initial Cost ($146,600.00)

NPV $155,963.46
NPV Final $9,363.46
IRR 17%
 Old
Current Book Value 6000
Annual Depr. Charge 2000
Salvage Value 20,000
Removal Cost 1,000
Recaptured on Depreciation 800
w from removing Old System 18,200

Cost of Capital 15%

Tax Rate 40%

3 4 5 6 7 8 9 10
35000 35000 35000 35000 35000 35000 35000 35000
32000 32000 32000 0 0 0 0 0
3000 3000 3000 35000 35000 35000 35000 35000
-1200 -1200 -1200 -14000 -14000 -14000 -14000 -14000
33800 33800 33800 21000 21000 21000 21000 21000
$22,224.05 $19,325.26 $16,804.57 9078.87951 7894.67784 6864.93725 5969.5107 5190.8788

Tax Rate at 50%

3 4 5 6 7 8 9 10
35000 35000 35000 35000 35000 35000 35000 35000
32000 32000 32000 0 0 0 0 0
3000 3000 3000 35000 35000 35000 35000 35000
-1500 -1500 -1500 -17500 -17500 -17500 -17500 -17500
33500 33500 33500 17500 17500 17500 17500 17500
$22,026.79 $19,153.73 $16,655.42 7565.73293 6578.8982 5720.78104 4974.5922 4325.7324
 11 12 13 14 15
35000 35000 35000 35000 35000
0 0 0 0 0
35000 35000 35000 35000 35000
-14000 -14000 -14000 -14000 -14000
21000 21000 21000 21000 21000
4513.8077 3925.0502 3413.0871 2967.9018 2580.7842

11 12 13 14 15
35000 35000 35000 35000 35000
0 0 0 0 0
35000 35000 35000 35000 35000
-17500 -17500 -17500 -17500 -17500
17500 17500 17500 17500 17500
3761.5064 3270.8751 2844.2392 2473.2515 2150.6535