How do to calculate the NPV? Given Investment Plant life Salvage value $ 4,000,000 5 $ 400,000

How do to calculate the NPV?

 

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Given Investment Plant life Salvage value $ 4,000,000 5 $ 400,000 Variable Cost % 45% Fixed operating cost $ 1,000,000 Tax rate 38% Working capital Required Rate of Return PROBLEM 2-11 10% Change in revenues 15% Solution Year 0 1 2 3 4 Sales volume Unit Price Revenues Variable Operating Costs Fixed Operating Costs Depreciation Expense Net Operating Income Less: Taxes NOPAT Plus: Depreciation Less: CAPEX $ 1,000,000 $ 2.00 1,500,000 $ 3,000,000 $ 2.00 2.50 3,500,000 2.50 5 $2,000,000 2.50 2,000,000 3,000,000 7,500,000 8,750,000 5,000,000 (900,000) (1,350,000) (3,375,000) (3,937,500) (2,250,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (800,000) (800,000) (800,000) (800,000) (800,000) $ (700,000) $ (150,000) $ 2,325,000 $ 3,012,500 $ 950,000 266,000 57,000 (883,500) (1,144,750) (361,000) $ (434,000) $ (93,000) $ 1,441,500 $ 1,867,750 $ 589,000 800,000 800,000 800,000 800,000 800,000 Less: Working Capital (4,000,000) (200,000) 248,000 (100,000) (450,000) (125,000) 375,000 500,000 Free Cash Flow $ (4,200,000) $ 266,000 $ 257,000 $ 2,116,500 $ 3,042,750 $ 2,137,000 Given Investment Plant life Salvage value $ 4,000,000 5 $ 400,000 Variable Cost % 45% Fixed operating cost $ 1,000,000 Tax rate 38% Working capital Required Rate of Return PROBLEM 2-11 10% Change in revenues 15% Solution Year 0 1 2 3 4 Sales volume Unit Price Revenues Variable Operating Costs Fixed Operating Costs Depreciation Expense Net Operating Income Less: Taxes NOPAT Plus: Depreciation Less: CAPEX $ 1,000,000 $ 2.00 1,500,000 $ 3,000,000 $ 2.00 2.50 3,500,000 2.50 5 $2,000,000 2.50 2,000,000 3,000,000 7,500,000 8,750,000 5,000,000 (900,000) (1,350,000) (3,375,000) (3,937,500) (2,250,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (1,000,000) (800,000) (800,000) (800,000) (800,000) (800,000) $ (700,000) $ (150,000) $ 2,325,000 $ 3,012,500 $ 950,000 266,000 57,000 (883,500) (1,144,750) (361,000) $ (434,000) $ (93,000) $ 1,441,500 $ 1,867,750 $ 589,000 800,000 800,000 800,000 800,000 800,000 Less: Working Capital (4,000,000) (200,000) 248,000 (100,000) (450,000) (125,000) 375,000 500,000 Free Cash Flow $ (4,200,000) $ 266,000 $ 257,000 $ 2,116,500 $ 3,042,750 $ 2,137,000

Answer rating: 100% (QA)

Based on the image you sent the Net Present Value NPV can be calculated using the following formula ... View the full answer