Example NPV Template

A company is considering to buy a major project worth $22 million. It is a five-year project. The sales and cost data are provided here:

Year 1	Sales (Units)
1	80,000
2	90,000
3	100,000
4	110,000
5	90,000

Price per unit = $400

Variable cost per unit = $200

Fixed costs per year = $800,000

Depreciation/CCA per year = $40,000

Tax rate = 30%

Discount rate = 10%

REQUIRED: Use the following template, calculate the operating cash flow and net present value. Based on the results of your calculations, would you recommend the project? If yes, why?

Net Present value	YEAR 1	YEAR 2	YEAR 3	YEAR 4	YEAR 5
SALES (UNITS)
PRICE PER UNIT
SALES ($$)
VARIABLE COST/UNIT
VARIABLE COSTS
FIXED COSTS
DEPRECIATION (-)
EBIT
DEPRECIATION (+)
TAXES (ON EBIT)
OPERATING CASH FLOW
PRESENT VALUE @10%