Estimate the NPV at a 12% interest rate and the DCFROR for the project described in Example

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Estimate the NPV at a 12% interest rate and the DCFROR for the project described in Example 6.8, using the MACRS depreciation method.

Data in example 6.8

A chemical plant with a fixed capital investment of $100 million generates an annual gross profit of $50 million. Calculate  the depreciation charge, taxes paid and after-tax cash flows for the first ten years of plant operation using straight-line  depreciation over 10 years and using MACRS depreciation with a five year recovery period. Assume the plant is built  at time zero and begins operation at full rate in year 1. Assume the rate of corporate income tax is 35% and taxes must  be paid based on the previous year’s income.

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Chemical Engineering Design

ISBN: 9780081025994

6th Edition

Authors: Ray Sinnott, R.K. Sinnott, Sinnott Gavin Towler

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