Calculate the NPV for the following capital budgeting proposal: $200,000 initial cost, to be depreciated straight line
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Question:
Calculate the NPV for the following capital budgeting proposal: $200,000 initial cost, to be depreciated straight line over five years to an expected salvage value of $10,000 dollars. Resale value of the machine is expected to be $11,000. It has a 35% tax rate, $85000 additional annual revenues, $33,000 additional annual expense, and $10,000 additional investment in working capital.
In the project described above what would be your projected cash flow for Year 5?
What would be your projected cash flow for year 2?
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