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

## Question:

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.

## Step by Step Answer:

**Related Book For**

## Chemical Engineering Design

**ISBN:** 9780081025994

6th Edition

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