For the project given in Example 9.21, the manufacturing costs, excluding depreciation, are $30 million/y, and the revenues from sales are $75 million/y. Given the depreciation values calculated in Example 9.21, calculate the following for a 10-year period after start-up of the plant:

1. The after-tax profit (net profit)

2. The after-tax cash flow, assuming a taxation rate of 30%

Example 9.21

The fixed capital investment (excluding the cost of land) of a new project is estimated to be $150.0 million, and k − 1 the salvage value of the plant is $10.0 million. Assuming a seven-year equipment life, estimate the yearly depreciation allowances using the following:

The straight-line method

The sum of the years digits method

The double declining balance method