Air Scrubbers Furnace Fuel Change Net Present Value using the Annuity Table to determine PV of cash flow Net Present Value using the Annuity Table to determine PV of cash flow NPV = Initial Cost + (Net Annual Cash F Amount Factor Present Value NPV = Initial Cost + (Net Annual Cash FI Amount Factor Present Value Initial investment 1 S Initial investment 1 S PV of Annual net cash flow for 15 years PV of Annual net cash flow for 15 years Net present value S Net present value S OR OR Net Present Value Using Excel to determine PV cash flow Net Present Value Using Excel to determine PV cash flow NPV = Initial Cost + PV of Cash Flow Present Value NPV = Initial Cost + PV of Cash Flow Present Value Initial investment Initial investment PV of Annual net cash flow for 15 years =PV[rate, value1,[value2]) PV of Annual net cash flow for 15 years =PV[rate, value1,[value2]) Net present value S Net present value $ Payback Period = Initial Investment / Net Annual Cash Flow Payback Period = Initial Investment / Net Annual Cash Flow Internal Rate of Return Internal Rate of Return Using Annuity Table Using Annuity Table OR OR Using Excel =IRR(M6:M21) use the IRR worksheet Using Excel =IRR(M26:M41) use the IRR worksheet Average Rate of Return = Ave Net Income / Ave Book Value of investment Average Rate of Return = Ave Net Income / Ave Book Value of investmentAir Scrubbers IRR Worksheet Period Cash Flow 1 2 3 4 5 8 9 10 11 12 13 14 15 Required Investment Annual Cash Flows Annual Met Income Project Life Average Book Value Cost of Capital Air Scrubbers 112,500 30,000 19,000 15 years 56,250 10% Furnace Fuel Change Air Scrubbers Furnace Fuel Change Average |Average Average Average Year Net Book Year Net Book Income Value Income Value 1 19,000 $108,750 1 17,000 $121,800 2 19,000 101,250 2 17,000 113,400 19,000 93,750 17,000 105,000 4 19,000 86,250 4 17,000 96,600 5 19,000 78,750 5 17,000 88,200 19,000 71,250 6 17,000 79,800 19,000 63,750 7 17,000 71,400 8 19,000 56,250 8 17,000 63,000 9 19,000 48,750 9 17,000 54,600 10 19,000 41,250 10 17,000 46,200 11 19,000 33,750 11 17,000 37,800 12 19,000 26,250 12 17,000 29,400 13 19,000 18,750 13 17,000 21,000 14 19,000 11,250 14 17,000 12,600 15 19,000 3,750 15 17,000 4,200 Average $ 19,000 $ 56,250 Average |$ 17,000 $ 63,000